The due date to file your income tax returns for the year ending 31st March 2015 approaching fast i.e. 31 August. Luckily, the revised forms are much easier than their earlier forms which had debatable provisions and compulsory disclosure of aboard trips and details related to dormant bank accounts. While you won’t have to fill a multiple pages long return form, the new form has retained some of changes it had earlier proposed. So, make sure you fill the correct forms with due care.
Confirm your tax credit online
Form 26AS has all the details of the tax deposited under your PAN with the income tax department by the deductor as well as any advance tax paid. This includes the TDS on interest on bank deposits, salary, consultancy charges or even sale of property. You can easily access it online either by Net-banking account if it is linked to your PAN or from income tax portal by login as tax payer. Check whether the tax paid by you is correctly reflecting in the Form 26AS. This will help you to avoid the errors like mismatch of tax credit and further proceedings.
Rectify mismatch in Form 26AS
In case there is mismatch, get the deductor to rectify and file a required revised TDS return. This is important because the income tax department goes by what is reflects 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 for that year. It is very important to have parity in return form and form 26AS would ensure faster processing of returns, speedy disbursement of refunds if any and also helps in avoiding unnecessary questioning by the income tax authorities. Ensure that transactions mentioned in Form 26AS have been reported correctly in your return. If there is a 10% TDS on interest from a fixed deposit, the full interest should be reported in your income tax return. If you have more than one employer during the year, then there are chances that both the employer had considered your deductions and other benefits, which lead to lower payment of income tax. Hence recalculate the income tax considering both incomes and pay tax accordingly.
Add up income from other sources
Apart from salary income, taxpayers also have income from other sources. Add up all interest earned on fixed and recurring deposits, infrastructure bonds, NSCs, KVPs and savings bank account. Even if TDS has been deducted on interest on FDs, you might need to pay more tax if you are in the 20-30% tax bracket (taxable income of exceeding Rs. 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 inbuilt calculators that tell you how much you have to pay.
Reporting house property rental income
The revised forms have also separated the columns for ‘deemed-to-be-let-out’ and ‘let-out’ status of your house 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 revised 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 revised 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 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 class of taxpayers. If your income is more than Rs. 5 lakh a year and includes foreign income, then you have to e-file your tax return. Even if the income is below Rs. 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 up-loading 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 come up with new 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.