Steps to File Tax Returns

                                      

The deadline to file your income tax returns has been extended to August 31. So, you still have about six weeks to file your ITR forms. Here's what you need to do to file an error-free return.

CHECK YOUR TAX CREDIT ONLINE

The Form 26AS has details of the tax deposited with the income tax department on your behalf. This includes the TDS on bank deposits, salary , consultancy charges or even sale of property .You can access it online through your Netbanking account if it is linked to your PAN. Check whether the tax paid by you is reflecting in the Form 26AS.

RECTIFY MISMATCH IN FORM

26AS In case of a mismatch, get the deductor to rectify and file a revised TDS return.This is important because the tax department goes by what is stated in your Form 26AS. Once the return is filed, the tax department's system reconciles the tax paid details submitted in the return form with the amounts appearing in the corresponding Form 26AS of the tax payer.

"Parity in return form and Form 26AS would ensure faster processing of returns, speedy disbursement of refunds and also helps in avoiding unnecessary questioning by the tax authorities," says Kuldip Kumar, partner and leader, personal tax, PwC India.

Also ensure that the transactions mentioned in the Form 26AS have been reported in your return. If there is a 10% TDS on interest from a fixed deposit, the full interest should be reported. If you switched jobs during the year, you might have got double exemption and deduction.You have to report both incomes and pay tax.

ADD UP INCOME FROM OTHER SOURCES

Apart from salary , taxpayers may also have income from other sources. Add up all the interest earned on fixed and recurring deposits, infra bonds, NSCs, Kisan Vikas Patras and even your SB account. Even if TDS has been deducted on FDs, you might need to pay more tax if you are in the 20-30% tax bracket (income of over `5 lakh a year).

DO NOT FORGET GIFTS

Any `gift' transferred to close relatives is not taxable. However, any income arising from that asset is fully taxable in the hands of the transferor. So, if you invest the gifted money , the interest or profit earned from it gets added to your income.

INCLUDE FOREIGN ASSETS

The new ITR-2 asks for details of foreign bank account's holding status (both as an owner and as a beneficiary), account opening date, interest accrued during the year and schedule and fields number under which the same income is reported.

CALCULATING CAPITAL GAINS

If you sold any mutual funds, stocks, property or gold during the year and made a profit, report the gains in your tax return. Some of these gains will not attract any tax but others might.

REPORTING RENTAL INCOME

You are liable to pay tax even if you have not earned any income from your property . In case of sale, the new forms seek yearwise particulars regarding any unutilised amount lying in capital gain scheme account to check for longand shortterm gains. If the property was outside India, the new forms require the taxpayer to fill the details of such capital gain income in the Schedule FSI where details of income from outside India and tax relief need to be reported.

CLAIM THE DEDUCTIONS

Most taxpayers are familiar with tax deductions under Section 80C and Section 80D. But there are several other deductions, such as those for disabilities and certain illnesses.

CHOOSE THE RIGHT MODE

Online tax filing is not only easy but also mandatory for certain taxpayers.If your income is more than `5 lakh a year and includes foreign income, then you have to e-file your tax return.Even if the income is below `5 lakh but you are claiming a refund, e-filing is compulsory . E-filing not only ensures your ITR is error-free, but is more reliable as well. E-filed tax returns get processed much faster.

VERIFY YOUR TAX RETURN

The procedure does not end with uploading your return. You need to verify it also. From this year, the tax department has introduced the facility of electronic verification code (EVC). But it is not fully operational yet. If you can't go paperless, the option of sending the ITR V by post to Bengaluru is open. The ITR V must reach the CPC within 120 days of filing the return.

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