Income Tax Return (ITR) Filing Rules: The due date for filing the income tax return by individuals (who are not liable to tax audit) is 31st July 2022. It is always advisable to file the return on time because it will not only help in the faster processing of tax refunds but will also reduce the chances of errors on your part.
Every year, the Income Tax Department introduces certain changes in the tax-filing process or the tax forms. A taxpayer must know these changes to file an error-free income tax return.
Here are the 10 things you should watch out for while filing the income tax return for FY 2021-22 (AY 2022-23).
1) Turnover or gross receipt
Persons engaged in business must file the return of income if the turnover of the business during the financial year 2021-22 exceeds Rs 60 lakh. In the case of professionals, the return filing is mandatory if the gross receipt exceeds Rs 10 lakh.
2) Tax deducted or collected at source
A person must file the return of income if the aggregate amount of tax deducted at source (TDS) and tax collected at source (TCS) in his case during the previous year is Rs. 25,000 or more. The limit of Rs. 25,000 shall be considered as Rs. 50,000 in the case of a resident senior citizen.
3) Deposit in saving bank account
A person must file the return of income if the aggregate deposit in his one or more savings bank accounts is Rs. 50 lakh or more during the previous year.
4) Sale/purchase of land or building
If a person has earned capital gains from the sale of land or building, it will be mandatory for him to furnish the date of purchase as well as the date of sale thereof in the income-tax return. This disclosure is required to verify the eligibility and the allowability of capital gain exemption under Sections 54, 54EC, and 54F.
5) Cost of improvement on land or building
In this year’s ITR forms, the taxpayer shall be required to give year-wise details of the cost of improvement (if any) incurred on the land/building transferred during the financial year 2021-22.
6) Loan or advance from closely held companies
Any payment by way of loan or advance, by a closely held company, to a shareholder who is the beneficial owner of 10% or more equity capital of the company, or to a concern in which the shareholder has a substantial interest is deemed and chargeable to tax as dividend in the hands of such shareholder. In this year’s ITR forms, such deemed dividend income shall be separately required to be reported under Schedule OS (Other Sources).
7) Interest from Provident Fund (PF)
If the aggregate amount of the contribution made by an employee during the financial year 2021-22 in the recognised and statutory provident fund exceeds Rs. 2,50,000, then the interest accrued on such excess amount of contribution shall be taxable under the head of “income from other sources”. The limit of Rs. 2,50,000 shall be increased to Rs. 5,00,000 if the employer doesn’t contribute to such funds.
Employees shall be separately required to report this income under the tax return.
8) Category of Pensioner
An individual receiving pension had to choose the option of ‘Pensioners’ under the nature of employment. In this year’s ITR forms, a pensioner has been classified into the following categories:
- Pensioners – CG,
- Pensioners – SC,
- Pensioners – PSU and
- Pensioners – Others.
9) Issuance of ESOPs to employees of start-ups
ESOPs have been a significant component of the compensation for the employees of start-ups, as it allows the founders and start-ups to employ highly talented employees at a relatively low salary amount with the balance being made up via ESOPs.
In general, when an employee is allotted securities under ESOP, the fair market value of the securities on the date of exercising of option and the amount paid by the employee for such securities is taxable as perquisite. However, an employee of the eligible start-up can defer the payment or deduction of tax in respect of securities allotted under ESOP. In the case of employees of eligible start-ups, tax is paid or deducted in respect of ESOPs within 14 days from the earliest of the following period:
a) After the expiry of 48 months from the end of the assessment year relevant to the financial year in which securities are allotted under ESOPs;
b) From the date the assessee ceases to be an employee of the organisation; or
c) From the date of sale of shares allotted under ESOP.
In this year’s ITR Forms, a separate schedule ” Tax Deferred on ESOP” is inserted to seek the following disclosures:
a) Amount of tax deferred in ITR filed for AY 2021-22;
b) Date of sale of specified securities and amount of tax attributable to such sale;
c) The date on which he ceased to be an employee of the organisation;
d) Amount of tax payable in current assessment year;
e) The balance amount of tax deferred to be carried forward to the next assessment years.
10) Annual Information Statement
Annual Information Statement (AIS) is a statement that provides complete information about a taxpayer for a particular financial year. It contains information about taxpayers’ incomes, financial transactions, tax details, income-tax proceedings, etc.
A taxpayer can access AIS information by logging into his income-tax e-filing account. On one hand, AIS information allows taxpayers to easily file their tax returns because all information is prefilled on the basis thereof. On the other hand, it is also used by the income-tax department to cross-check the details furnished by taxpayers in the tax return. Thus, it is always advisable for a taxpayer to check the AIS before filing the return of income to avoid underreporting or misreporting of income in return.
(By CA Dipen Mittal, Senior Manager, Taxmann)