10 things you need to know about filing your Income Tax Returns

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The taxpayer who could not file their income tax returns for the financial year 2017-18 by July 31, 2018, can feel relaxed as the Central Board of Direct Taxes has extended the last date for filing income tax return from July 31, 2018, to August 31, 2018. Keeping in mind those who are yet to file their income tax return by August 31, 2018, this article will highlight certain things which should be kept in mind while filing income tax returns.

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Select the correct ITR Form for filling

The Income Tax department has issued seven types of Income Tax Return (ITR) forms and selection of ITR for filing the tax return depends upon the type of income and status of the taxpayer. The disclosure requirements are different in all the forms and therefore it is important to choose the correct form while furnishing your income tax return, failing which your return can be treated as defective.

Of special note, the new ITR-1 form has been withdrawn for a non-resident. It is applicable only to residents having a certain set of income. Therefore, a non-resident person will have to choose other ITR forms to file his/her return of income for the Assessment Year 2018-19.

Reconcile income with Form 26AS

Form 26AS displays various incomes earned by an individual and corresponding tax deducted on such incomes. It is of utmost importance to reconcile and disclose income in your tax returns in sync with income reflecting in Form 26AS. Similarly, income from salary should match with that reported by your employer in Form 16 Part A and Part B. Any difference may result in you receiving notices from the department asking for clarification for the variation. Therefore, a reconciliation of any difference may help the taxpayer avoid unnecessary trouble in the future. If there are some incomes appearing in Form 26AS but they are not offered to tax, the corresponding TDS credit shall also be carried to future years till the time such income is offered for taxation.

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Disclosure of losses being carried forward

In order to carry forward certain losses incurred during the year for offset against income in future years, it is mandatory to file income tax return on or before the due date. If income tax return claiming carry forward of certain current year’s losses is filed after the due date, such losses will not be allowed to carry forward and the same shall lapse.

Deduction under section 80C

Tax saving investments and expenditures incurred under Section 80C of the Act during the Financial Year 2017-18 can lower your tax liability. Some of the investments which can save your tax liability are Employees Provident Fund (EPF), Public Provident Fund (PPF), and investments in ELSS schemes of Mutual Fund, Life Insurance Premium paid, etc. Deduction upto Rs 1,50,000 can be made in such tax saving instruments.

Similarly, Section 80TTA of the Act provides a deduction of upto Rs 10,000 for interest earned on savings bank/post office savings account by individual taxpayers and only the excess amount is chargeable to tax.

Assessee claiming Foreign Tax Credit

In case of a resident having incomes from global sources and taxes paid outside India on such incomes, he/she can claim a credit of such foreign taxes paid against his/her tax payable in India. In order to claim FTC, the taxpayer is required to furnish Form 67 on or before the due date of filing return of income.

Disclosure of Assets and Liabilities

It is mandatory for an individual to furnish the details of his assets (eg, immovable property, jewelry, securities, etc.) and liabilities in the income tax return if his/her income exceeds Rs 50 lakh. The Schedule AL in ITR 2, ITR 3, and ITR 4 requires the taxpayer to provide the address and cost of each immovable property possessed by him/her. Non-resident individuals are required to report only the assets located in India.

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Disclosure of Foreign Assets

It is mandatory for all ordinary resident taxpayers to disclose correct details of their foreign assets and corresponding income, if any, earned from such incomes. Further foreign assets have to be reported even if there is no taxable income in India. Tax department may levy a penalty of Rs 10 lakh if taxpayers fail to disclose foreign assets owned by them.

Not mandatory to send ITR-V to CPC – Bengaluru

It is mandatory to verify income tax return and get it processed by the Central Processing Centre of the Income Tax Department. An income tax return can be verified through Digital Signature, Aadhaar-based OTPs, or by generating Electronic Verification Code (EVC). If the ITR is verified using any of the above methods, then the physical copy of ITR-V need not to be sent to the CPC – Bengaluru. If the return is not verified by the modes as mentioned above or by sending a hard copy of the same to CPC – Bengaluru, the return will not be processed, and refunds, if any, will not be granted. The return has to be verified within 120 days from the date of uploading of the same.

Fee for a delay in filing of the ITR

As per the latest amendment in the law, the delay of even one day in the filing of income tax return would cost you Rs 5,000. A late filing fee of Rs 5,000 shall be charged if the return is filed between September 1, 2018, and December 31, 2018. The fees shall be increased to Rs 10,000 if the return is filed between January 1, 2019, to March 31, 2019. The late filing shall be Rs 1,000 for small taxpayers whose taxable income is up to Rs 5 lakh.

Return to be filed within one year from end of the financial year

Any person who failed to file his income tax return before the due date prescribed under the Act can file a belated return (i.e. which is filed after the due date) at any time before the end of the relevant assessment year. Further, if a revised return is required to be filed, the same also needs to be filed before the end of the relevant assessment year.

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Praveenkumar Darak is Associate – Tax and Rashi Gupta is a Second-Year Article Trainee at N.A. Shah Associates LLP.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

Source: Yourstory

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