Filing Income Tax Return
The Income Tax Return (ITR) is mandatory to be e-filed by every person whose Gross Total Income is more than his Basic Exemption Limit i.e. Rs. 2,50,000 for Individuals who are not senior citizens, Rs. 3,00,000 for senior citizens, and Rs. 5,00,000 for super senior citizens. The individuals before e-filing the Income Tax Return should prepare details and keep in hand so that no problem appears while filling the desired Income Tax Return Form. What documents should be realized for preparing the details of incomes. Why to provide complete details and how to be assured that every financial earning has been detailed as required by Income Tax Department: (i) Form 16 from Employers:
The salaried individuals should receive Form 16 from their respective employers as it is a proof of the Tax Deducted at Source by the employer and the details provided in Form 16 should be kept in hand so that the same details are filled in Income Tax Return Form under the head ‘Salaries’. (ii) Form 16A from Deductors other than Employers:
In case, the tax is deducted by others than the employer/s then Form 16A should be realized from them. Generally, banks and post office deduct tax at source on ‘Interest on Deposits’; in such cases, Form 16A should be taken from them and kept in hand while e-filing Income Tax Return.
(iii) Form 16B from the Buyers:
Sometimes, properties are sold during the financial year and buyers deduct Tax Deduction at Source from the amount to be paid by them. In such case, the buyer deposits such TDS to Income Tax Department and generate Form 16B. Therefore, in such cases, Form 16B should be taken from the Buyers (if any).
(iv) Form 16C from Tenants:
In case, an individual is getting rent form the tenants and it is more than Rs. 50000 per month; in such cases, the tenants are directed to deduct Tax Deduction at Source from the payment of rent to the individual (landlord). Then the tenants deposit the TDS in Income Tax Department and realized Form 16C to be provided to the landlord. Such Form 16C should also be realized and kept in hand while e-filing Income Tax Return.
(v) Tax Credit Statement 26AS / Annual Information Statement - AIS from website of Income Tax:
Apart from Form 16, 16A,16B, and 16C from the Deductors, an individual should also download Tax Credit Statement 26AS / Annual Information System - AIS, from the website of Income Tax Department and match the details of deductions at source with the Tax Credit Statement before e-filing Income Tax Return. In case of mis-match, it should be decided which details are accurate and accordingly the return should be filed. In case, there is any mismatch, the individual should ask the deductor to rectify the mistake and e-file rectified TDS statement so that accurate amount be reflected in Tax Credit Statement / Annual Information Statement. In case, the mismatch is not corrected, then the individual will receive a notice from the Income Tax Department for clarification of mismatch.
(vi) Statement of interest on Deposits:
The amount of interest earned on deposits in Post Office, Banks, and other Financial Institutions should be prepared from the Statement of Interest taken from them.
(vii) Collection of proofs to claim Deductions:
There are a lot of deductions available to be claimed under section 80C to 80U for the individuals and there are a lot of exemption available under section 10 which may be taken into consideration while quantifying the taxable portion of incomes earned during the financial year. An individual should keep all the records relatingto claimed exemptions, deductions in separate file as the proofs may be asked by the Income Tax Officers at any time in future. Generally, tax savings are claimed for investments under section 80C, 80CCC, 80CCD (1) limited upto an amount of Rs. 1,50,000 and additional benefit for NPS investment of Rs. 50000 in 80CCD(1B); and for expenditures under other sections i.e. 80D to 80U. In 80D, the proof of receipt for payment of Health Insurance Premium for self, spouse and/or children and in 80E, proof for payment of interest on education loan should be maintained. For deduction in 80G, the details of organization come under 80G with name, PAN number, location etc; should be prepared and kept in hand. (viii) Home Loan Statement with Interest Charged:
In case of home loan taken from Bank or Non-Banking Financial Companies; the statement of home loan principal amount as well as interest amount charged during the year should be taken. The amount of principal amount is counted in 80C for deduction purposes and ‘interest on home loan’ is claimed under the head ‘income from house properties’ under section 24. The maximum amount for self-occupied property for interest is Rs. 2,00,000.
(ix) Income on sale of Capital Asset:
The individuals who sold any capital asset during the financial year, should compute income or loss on the sale of Capital Asset. The details of buyer with PAN number should also be available at the time of e-filing Income Tax Return. In case of sale of mutual funds, equity shares, such details can be taken from the broker.
(x) Details of Bank Accounts:
Before e-filing Income Tax Return, an individual should prepare the list of active bank accounts and it is also required to pre-validate the bank accounts so that the refund (if any) can easily come in the pre-validated bank account. For pre-validation, it is necessary to link the bank account with PAN which is usually linked. For each bank account, the details i.e. Bank Name, Account Number, IFSC Code and type of Bank Account should be ready.
(xi) Aadhaar Details:
An individual should keep the Aadhaar details ready while e-filing Income Tax Return. It is mandatory now to quote Aadhaar number in Income Tax Return; even for e-verification, a message come on Aadhaar linked mobile number for verification of the Income Tax Return at the end of e-filing Income Tax Return.
New portal for e-filing Income Tax Return:
The old portal of incometaxindiaefiling.gov.in has been replaced with new portal incometax.gov.in from FY 2020-21. The ITR forms have also been changed. The process is also changed. What are the major changes, let’s understand in simple words. Firstly, JSON utility is introduced for offline filing of Income Tax Return (ITR) for the convenience of the taxpayers. Secondly, the old return preparation software is replaced with more interactive return preparation software in new online tax payment system, integrated for immediate processing of ITR.
What happens if a taxpayer withdraws amount exceeding a specified limit:
From FY 2020-21, as per the Budget 2020 speech, a new section was introduced i.e. 194N. The taxpayers who have not filed ITR for last three years and withdraw cash in excess of Rs. 20 Lacs, have to pay 2% TDS. For normal taxpayers the limit is Rs. 1 Crore from FY 2019-20, from one bank / post office account. In case, the amount is withdrawn above the limit, 2% TDS is deducted.
Such persons under Income Tax Act, will not be eligible to file ITR-1 and such TDS will also not be carried forward to next year if it is not claimed as refund during the current year.
Tax on Dividend Income in the hands of Recipient:
The Dividend Distribution Tax (DDT) has been abolished from FY 2020-21. If a taxpayer received Dividend from company, it will be taxable in the hands of taxpayers.
Tax Deducted at Source for the payments to Resident Contractors and Professionals:
The contractors with turnover / receipts exceeding Rs. 1 crore and the professionals with turnover / receipts exceeding Rs. 50 Lacs require to get their books audited. The deductors for the taxpayers with audited books, are required to deduct TDS under section 194C and 194J respectively.
In case, the TDS is not deducted u/s 194C and 194J then the TDS at the rate of 5% will be deducted u/s 194M.
In case TDS is deducted u/s 194M, the deductors have to issue Form 16D to the payees / deductees within 15 days of the due date of furnishing the challan-cum-statement in Form 26QD.
Last updated - July 18, 2021
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