Take the stress out of filing your tax return
Dreading the annual ritual of filing tax returns? Being familiar with the changes in tax rules can ease the process for salaried taxpayers
For many taxpayers, return filing is a dreaded
activity which they put off until the last minuteeven beyond the due date.
But this year, such procrastination will mean paying
a huge price. The penalty for late filing is ₹5,000, making it imperative to meet the 31 July deadline. If the
delay is beyond 31 December, the fine is higher at ₹10,000. Therefore, it’s best to
kick off the process right away. Read on to find out more.
Changes in tax rules
Before you embark on the process to file the return
for the assessment year 2018-19 (financial year 2017-18), you need to be aware
of some fundamental rules and key changes in the income tax return (ITR) forms
this year. Knowledge of slab rates, for instance, can help you compute your tax
liability correctly. The slab rate applicable to an individual drawing taxable
income between ₹2.5 lakh and ₹5 lakh has been reduced from 10%
to 5%. This is also the year when taxpayers who own more than one property and
claim tax benefits on the home loan interest paid will feel the pinch. Till the
financial year 2016-17, you could avail of tax break on the entire interest
paid – considered ‘loss’ – on home loan for let-out properties. “The entire
loss was allowed to be set off against other income without any limit,” adds
Agarwal. But from this year, the tax rules have been changed. “The government
has restricted the benefit of set-off loss from house property to a maximum ₹2 lakh per financial year and
the balance loss can be carried forward to next eight years,” explains Chetan
Chandak, Head of tax research, H&R Block.
While this has hurt taxpayers who had invested in
property, another change in rule has made them smile. This pertains to capital
gains/losses on investments and immovable properties. “Holding period for
capital gains to be considered on immovable property has been reduced from
three years to two years; also, year 2001 will now be the base year for
calculating the capital gains,” says Chandak. The new cost inflation index,
too, has been released.
Changes in tax forms
This apart, the ITR forms too have undergone several
changes this year. “Till last year, only net taxable figures of salary and
house property income were required to be disclosed. This year, detailed
calculations in respect of salary and house property income are required in
ITR-1 and ITR-4. Address of property would also be required for house property
income,” says Sandeep Sehgal, Director, Tax and Regulatory, Ashok Maheshwary
& Associates.
Till last year, if an individual or Hindu Undivided
Family (HUF) was a partner in a firm, ITR-2 could be used if they didn’t have
any other business income. “Now, such individual or HUF shall be required to
file its return in ITR-3 only irrespective of it has any other business income
or not,” adds Sehgal. The forms this time provide a separate column for
claiming capital gain exemptions under Sections 54, 54B, 54EC, 54EE, 54F, 54GB
and 115F.
Which ITR form is for you
The next step is to identify the form that you need
to use to file returns. “If you are using a private tax filing portal to file
your return, it will automatically choose the correct form based on your income
and assets,” says Sudhir Kaushik, Cofounder, Taxspanner.com.
However, if you are using the tax department’s portal, you will have to choose
the form yourself. The I-T department has released seven forms this year – for
salaried professionals or pensioners, the most relevant forms are ITR-1 and
ITR-2. If you are a self-employed professional or run a small business, you
should use ITR-4. Ensure that you mention your name in the manner it appears on
your PAN card. “The return will not be processed in case there is a PAN name
mismatch,” he adds. Do not forget to update your e-mail ID and mobile number so
as to receive timely communication related to return and refund processing.
Quoting Aadhaar is a must for resident taxpayers.
Verify TDS details in Form 26AS
To start with, access your Form 26AS – or tax credit
statement – available on the e-filing portal and check whether the tax deducted
by your employer and other deductors tallies with your Form 16 and TDS
certificates. “All the tax credits for salaries and other income should be
verified with 26AS. If there is any mismatch, it should be addressed to the
employer or payer of such income,” says Sehgal. You can also access your Form
26AS through your netbanking account.
When you sit down to file your return, keep certain
key documents at hand, including the Form 16 issued by your employer, bank
statements to know the interest income, records of investments and donations
made and a copy of returns filed last year. This will reduce the time consumed
to file returns as also the scope for errors.
What to watch out for
Remember that only interest earned on savings bank
account is exempt under Section 80TTA. Interest earned from fixed deposits and
recurring deposits is fully taxable at the rate applicable to the individual.
Also, TDS is only 10% of the interest earned on deposits. If the individual
falls in a higher tax bracket, he will have to pay additional tax.
Many taxpayers may be tempted to ignore reporting the
interest income. This can be a problem. If your Form 26AS shows TDS on interest
income, the tax department will send you a demand for additional tax on the
income.
Likewise, you must also ensure that you claim all tax
benefits you are entitled for – even the ones you might have missed mentioning
in the investment declaration submitted to your employer. Chief among these is
donations made to charitable institutions, as employers usually do not account
for deductions under section 80G.
Finally, do not delay e-verifying your return or
dispatching the printed and signed ITR-V to the CPC in Bengaluru only by
regular or speed post within 120 days of filing the return online.
Preeti Kulkarni
TOI 2JUL18
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