It’s June and the task of filing income tax returns is upon us. With the July 31 deadline approaching fast, its best to get cracking on filing your returns. That will give you ample time to tackle any hurdles on the way.
Take for example, the case of data on advance tax payments missing in income tax returns which has made the process a bit more tedious than usual, as reported by Moneycontrol on June 19.
Moneycontrol spoke to Khyati Dharamsi whose report had brought the issue of missing data to light. Dharamsi has been writing on personal finance topics for the past 15 years. Her areas of expertise are taxation, insurance, mutual funds and gold.
In this podcast, Dharamsi explains the nitty-gritties of advance tax, how the missing data has complicated the tax filing process further and the course of action that tax-payers can now follow.
The Central Board of Direct Taxes (CBDT), Ministry of Finance has now issued a circular clarifying that advance tax payments will reflect in the Annual Information Statement (AIS) and not Form 26AS, she said.
Here are a few important points that she highlighted.
1. Anyone who is estimating a high tax payment during a financial year (Rs 10,000 or more) has to pay advance tax. For example, someone with high interest income or high capital gains from sale of stocks, mutual fund units or a property, for example will have to pay advance tax. This must be paid in four instalments – by the 15th of June, September, December and March of that year.
2. Earlier, an individual’s Form 26AS used to mention his advance tax payments, and these would get pre-filled in the ITR forms. But, now these are not showing in Form 26AS, and therefore, also, not in the pre-filled ITR forms.
3. The missing advance tax payments data has caused much confusion. Dharamsi recounts the instance of a person who landed up paying her advance tax twice as she could not find this data in her ITR form.
4. A CBDT circular now clarifies that advance tax payments will reflect in your AIS and not Form 26AS. As a result, they will henceforth have to be manually entered in the ITR forms, thereby making the tax filing process more complex than before.
5. Form 26AS is like a summarized version of a taxpayer’s financial transactions (such as interest income, dividend, rent received, purchase/ sale of movable and immovable assets etc.) that are mentioned in greater detail in the AIS. That is, Form 26AS is simpler to understand. But now taxpayers will have to refer to the more complicated AIS at the time of filing returns.
6. According to Dharamsi, deductions under section 80TTB of the IT Act are also not reflecting in Form 26AS. This can be an important deduction for senior citizens. Under this section, resident senior citizens can claim deduction of up to Rs 50,000 of interest income earned per financial year from their gross income.
7. Dharamsi suggests that with information missing from pre-filled tax forms, taxpayers should make the effort to go through it carefully, fill the missing information and only then, file their returns.
8. If you are not very savvy with taxes, given the manual intervention needed this year, you should consider consulting a tax professional rather than filing the return on your own. This can help you avoid having to file revised returns later if you miss out on any tax exemptions or deductions.
9. Interestingly, many online tax portals have discontinued their free tax filing service this year. This, Dharamsi says could be because they are anticipating more hours of work on each return filing.
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