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Wednesday, July 27, 2016

Tax Returns Filing 2016

 It is time again to evaluate all your earnings of the previous financial year (FY)-1 April 2015 to 31 March 2016-and file your income tax returns (ITR) accordingly. If there are any taxes left, after taking into account tax deducted at source (TDS) and advance tax paid, those, too, have to be paid. Similarly, if excess tax was deducted, make sure you claim a refund. To do all this work, you have till 31 July-almost a month. However, it is better to do the needful as early as possible. By now, salaried employees would have received their Form 16 from the employer, apart from income and TDS proof from other sources. As per the income tax rules, an employer has to give employees their Form 16 by the end of May. Filing tax returns can be an easy process if you know what to do. Read on to find the details that are relevant to you-which forms to fill, how to file offline and online, and more.
 
 
Types of ITR forms
After you have understood what your income was in the previous year, it's time to file the tax returns so that you can pay any taxes that may still be due, or claim for refund, or neither of these two. The first step would be to find which form you need to use to file the tax return. There are different types of ITR forms applicable to income tax assessees, based on the nature of income one has. (See table: Which ITR form is for you.) For instance, if during the previous fiscal, your income source was only salary, then you need to file return under form ITR1. If you generated income from sources besides salary, say, from a house through rental income, or as interest from a fixed deposit, then also you can use ITR1. If, along with salary income, you earned from capital gains, you need to file your returns using ITR2.
 
Therefore, before you jump into filing your tax return, identify the sources of income and accordingly choose the relevant ITR form. If you use the wrong form, the return will be rejected. In order to identify your incomes, or even to file your return, you need to have various documents (See table: Checklist of documents). Once you have all the necessary documents, you can think about how to file.
 

Over the years, most income tax related work has become electronic-be it filing returns, paying taxes, obtaining TDS certificates or getting access to various types of information. However, the offline format has not been stopped so that even those with low incomes can file their tax returns offline.

 

 
 
 

New points to consider
While most assessees would provide information of relevant expenses and investments to their employer, you may have missed out on some. It may be the expenses and investments took place within the financial year but after you had provided documentary proofs to your employer. For example, a preventive health checkup may have been done on 15 March and you were not able to include bills as the last day to submit investment proof was 25 February. Such details that could not be included earlier, can be mentioned when you file your tax return. So, you should be aware of the new tax deduction rules.

 

In 2015 Budget, a few deduction limits were increased and some new ones were introduced. Tax deduction under section 80D of the Income-tax Act, 1961, against health insurance premium or preventive health check-ups was increased from R15,000 toR25,000. For senior citizens, this went up from R20,000 toR30,000. An additional deduction of R50,000 was introduced under section 80CCD for investments in National Pension System (NPS). This was over and above the standard limit of R1.5 lakh under section 80C.

 

The new ITR forms provide a specific space to claim the deduction under investment made in NPS. Take note of that space while filing tax returns if you have made this investment.

 

Also, whether filing on your own or with the help of a service provider, don't forget to claim tax collected at source (TCS), if any. TCS at the rate of 1% is collected from taxpayers when they purchase jewellery in cash exceeding R2 lakh in value. Credit of TCS can be claimed against the total tax . Credit for TCS can now be claimed via ITR-1, ITR-2 and ITR-2A. Earlier, it was not present in these forms

 

Complete the process
Filing the tax return itself does not mean the process is over. Don't forget to verify the form. If you have a digital signature, use that and submit the form. Even if you don't have a digital signature, you can verify the form online through a one-time password (OTP) generated using Aadhaar, Internet banking or even your ATM card. However, as of now, only State Bank of India offers OTP generation through ATM; more banks are expected to follow soon.

 

Once you e-verify the return, take a printout of the acknowledgement. The process is now complete. Save a copy for your record. If the return is not digitally signed, then generate the ITR-V Form, sign it and mail it to the income tax processing centre in Bengaluru, either by ordinary post or speed post, within 120 days of e-filing the return.

 

The process of tax filing has become easier over the years-online processes have been introduced; you no longer need to attach documents to the ITR; and many documents are available online. Now you have about a month's time to make use of these features and file your income tax return.

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