INDIAN INCOME TAX SPECIAL................ 10 steps to smart tax filing

INDIAN INCOME TAX SPECIAL 10 steps to smart tax filing





Here is what you need to do to file an error-free income tax return this year

The deadline to file your income tax returns is 31 August.Thankfully , the revised forms are much simpler than their earlier avatar which had con troversial provisions and mandatory disclosure of foreign trips and dormant bank accounts. While you won't have to fill a 14-page-long return, the new form has retained some of changes it had earlier proposed. So, make sure you fill the forms with care.

Check your tax credit online

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.

Ensure that transactions mentioned in 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 in your return. If you switched jobs during the year, you might have got double exemption and deduction. Report both incomes and pay tax accordingly .

Add up income from other sources

Apart from salary , taxpayers also have income from other sources. Add up all interest earned on fixed and recurring deposits, infrastructure bonds, NSCs, Kisan Vikas Patras and savings bank 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

Do not forget the clubbing of income provision. 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.If you invest the gifted money , Section 64 kicks in and the interest or profit earned gets added to your income.

Include foreign assets

The tax department is looking closely at accounts and assets held outside India. ITR-2 seeks foreign bank account's holding status (both as an owner and beneficiary), account opening date, interest accrued during the year and schedule and fields number under which the 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. E-filing portals have in-built calculators that tell you how much you have to pay.

Reporting rental income

The new forms have also segregated the columns for `deemed-to-be-let-out' and `let-out' status of your property. You are liable to pay tax even if you have not earned any income from it or if it is unoccupied. In case of sale of property , the new forms seek year-wise particulars regarding any unutilised amount lying in capital gain scheme account to check for long and short term gains. “If the property was situated 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,“ says Tapati Ghose, Partner, Deloitte Haskins & Sells LLP .

Claim the deductions

Most taxpayers are familiar with deductions under Section 80C and Section 80D. But there are several other deductions. Choose an e-filing portal that guides you well on all these deductions.If it does not ask you to fill in too many details, the portal may be denying you the chance to claim these deductions.

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, it is more reliable. The e-filing portal will choose the appropriate form and calculate the correct tax liability for the current year. What's more, e-filed tax returns get processed faster and refunds reach you faster.

Verify your tax return

The procedure does not end with uploading your return. You need to verify it also. Till last year, if you did not have a digital signature, you had to send a copy of the ITR V to the Central Processing Centre in Bengaluru. From this year, the tax department has introduced the facility of electronic verification code (EVC) which will make the procedure completely paperless. The option of sending the ITR V by post to Bengaluru is still open. The ITR V must reach the CPC within 120 days of filing.

Chandralekha Mukerji

TOI27JUL15

TOI27JUL15