By Puneet Gupta
Today is the last date for filing your income tax return for FY2016-17 or AY2017-18. In fact, when you are earning income, reporting of income and filing of taxes are inevitable. A bit of planning and organizing data regarding the various income sources can make the income-tax return (ITR) filing process much simpler. Here are some suggestions to help you smile your way into tax filing:
The first step is to identify whether or not there is an ITR filing requirement. Let us understand this with an example:
Rohan Jain, 21, started working for a consulting firm a year back. His annual salary is Rs 3.50 lakh and savings bank interest income is Rs 11,000. From his friends, Rohan learnt of some tax saving investment options. With no major expenses, he invested Rs 1.50 lakh in tax saving instruments over the year.
The basic tax exemption limit for the Financial Year (FY) 2016-17 for individuals is Rs 2.50 lakh (Rs 3 lakh for individuals with age of 60 years or more and Rs 5 lakh for individuals with age of 80 years or more).
Rohan’s taxable income after claiming applicable deductions stood at Rs 2.01 lakh (i.e. Salary: Rs 3.5 lakh plus Bank interest income: Rs 11,000 less Deduction under Section 80C: Rs 1.5 lakh less Deduction under Section 80TTA: Rs 10,000) which is less than the basic exemption limit.
Rohan assumed that there was no need for him to file the ITR this year. However, as per law, anyone with gross income, exceeding the basic exemption limit has to compulsorily file the ITR even if his income after claiming deductions under Chapter VI-A falls below the maximum amount not chargeable to tax.
Thus, contrary to Rohan’s assumption, he was actually required to file the ITR. Mostly individuals find themselves in a dilemma regarding the ITR form to be filed by them. In an attempt to simplify the tax filing process, new ITR forms have been notified for the FY 2016-17.
The ITR-1 (SAHAJ) form can be filed by an individual with income of up to Rs 50 lakh during the year. This includes salary income, interest income and income from one house property only.
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Those who are not eligible to file Form ITR-1 – where they have income of more than Rs 50 lakh or own more than one house property or have any foreign asset or income from any source outside India will have to file Form ITR-2.
In the ITR forms released for the FY 2016-17, the Income Tax Department has added reporting requirements such as reporting of foreign bank accounts by non-resident individuals and cash deposited (Rs 2 lakh or more) in the bank account(s) during the demonetisation period.
Another important reporting requirement applicable with effect from 1 July 2017 is to report Aadhaar number / Aadhaar enrolment ID while filing the ITR.
It is advisable to have certain basic documents while preparing the ITR such as Form 26AS, copy of bank statements, TDS certificates (Form 16 and Form 16A), interest statements, tax saving investment receipts, etc.
Having determined the ITR filing requirement and the relevant form, it is important to know the filing deadlines.
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The due date for filing the ITR remains same for the FY 2016-17 as was for the FY 2015-16 i.e. 31st July for individuals with salary, house property and other income.
This year, the ITR forms were notified well in advance on 31 March 2017 – offering a full 4-month window for the individuals to file their ITR.
Effective FY 2016-17, there has been a change in the deadline to file belated ITR (return filed after the due date). The time period to file belated ITR has been reduced by one year, i.e. for the FY 2016-17 onwards, belated ITR can only be filed up to the end of next year, i.e. by 31 March 2018.
Although the time period to file the belated ITR has been reduced, the government has allowed revision of the belated ITR – unlike prior years where only ITR filed within the due date could be revised.
Another important point to note here is that for the FY 2016-17, the revised ITR can be filed until 31 March 2019. Thus, while belated ITR can be filed until 31 March 2018, the revised ITR can be filed until 31 March 2019.
Knowing the relevant ITR form, the reporting requirements and time-lines, taxpayers must also note that an ITR filed by them will not be treated as valid unless it is also verified.
Taxpayers can verify the ITR by sending a signed acknowledgement of the ITR (Form ITR V) to the Centralized Processing Centre (CPC) within 120 days of e-filing. The taxpayers also have an option to e-verify the ITR at the time of e-filing or thereafter.
E-verification of the ITR can be done using the below modes:
# Electronic verification code (EVC) received in registered mobile number and e-mail
# Aadhaar OTP
# Login to E-filing through net banking
# EVC-Through bank account number
# EVC-Through demat account number
# EVC-Through bank ATM
So, start collating relevant documents like Form 26AS, Form 16, bank statements, etc. and make sure to file the ITR before the due date to maintain a healthy tax record.
(The author is senior tax professional, EY India. Views expressed are personal.)