Over the years, the format of the income-tax return has evolved and the forms available today provide for declaration of exempt income, foreign assets, foreign tax credits etc. In an attempt to bring more taxpayers under the tax net and tap those taxpayers who pay less tax through underreporting, the government is planning to run big data analytics.
Return form is a way to strengthen the arms of taxman with information, to detect black money and possible evasion. Also linking Aadhaar card and bank account with PAN is to keep a check on scrupulous entities having more than one PAN.
Foreign asset holders: As per the provision of law, an individual is required to file income tax return if his total income exceeds the maximum amount not chargeable to tax before giving effect to deductions under Chapter VI-A (80C, 80D etc) of the Act. Further, if an individual holds any assets outside India either in individual capacity or in his capacity as beneficial owner then the law requires him to file tax return even if his total income is below taxable limit.
For example, a retired senior citizen with income below the taxable limits, owning a house outside India which is currently being used by his son for residency, will be required to disclose such the asset by filing an income tax return. Even if the said asset is acquired on loan, such assets will have to be reported in the income tax return irrespective of the income.
Claiming refund, carrying forward losses: Income tax return is required for claiming refunds, carrying forward of losses and bringing on record the income earned during the year. For example, a professional individual receives payment after deduction of taxes. If at end of the year, his total income is below the taxable limit, a refund of the taxes deducted at source can be claimed by filing an income tax return.
Check Form 26AS: The maximum amount not chargeable to tax in case of an individual is R2.5 lakh per annum. If your age is between 60 and 80 then the limit is R3 lakh per annum and for age above 80 the limit is Rs 5 lakh. Nowadays, a taxpayer has the facility of downloading Form 26AS which will reflect the details of receipts and corresponding TDS appearing against the Permanent Account Number of the taxpayer as per the database of the Income-tax Department.
Before the due date of filing of the tax return, every taxpayer should download their Form 26AS from the income tax website and check the income against the receipts appearing in the Form 26AS. If your income in Form 26AS is above taxable limit then you should file income tax return as non-filing may lead to scrutiny from the income tax department.
To avoid penalty: While filing of income tax return has its benefits, non-filing of return can lead to penalty and prosecution.
Accordingly, it is imperative for a person to check whether or not they are liable to file income tax return. Legal proceedings under the Income-tax Act can be initiated up to four or six years prior to the current financial year. Accordingly, if you have not filed your return, it is advisable to maintain proof of income viz salary slips, Form 16, Form 16A, Form 26AS, bank statement for the past six years, to substantiate the claim.
Appropriate collection and apportionment of taxes help to build and maintain a strong nation. The government has been trying year after year to simplify the procedural requirement and provide every person with required tools to file income tax return. As citizens of India, it is our duty to consciously contribute towards the development of our nation and file tax returns on time. Check your bank statement, Form 26AS, assets and ascertain your liability to file your return.
The writer is executive director, Nangia & Co. With inputs from Neetu Brahma, manager, Nangia & Co