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Guidelines to filing your income tax return
Vikas Gandhi
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June 08, 2007

Come the month of June or July and it is time to file the income tax returns. By this time, individuals will have received Form No.16 (Salary income) and Form No.16A (tax deducted on Other Income).

Similarly individuals engaged in either business or profession may have completed adjustments and finalisation of yearly accounts. To avoid hassles for you and your tax professional, it is advisable to get ready for filing return as early as possible instead of waiting for the due date to arrive.

At the same time it is equally important to know your obligations and other intricacies of filing return of income.

Obligations of filing tax returns

It is a legal obligation for every individual to file a return of income, whose taxable income during the year has exceeded the exemption limit of Rs 100,000 (Rs 135,000 in case of females and Rs 185,000 in case of senior citizens).

Additional exemption limits stated above are not applicable to the individuals who are Non-Resident Indians.

Documents to keep ready

It is fruitless to go to the war front without proper arms and ammunition. Hence, it is always advisable to keep all the documents required for preparation of the income tax return ready and handy before calculating your tax liability and preparing your tax return. Some common documents required by an individual for preparing the return are:

Which ITR Form is applicable to you?

With the introduction of new income tax return forms based on nature of income earned during the year, one needs to know relevance of each return form and select the right form.

For an individual, four forms have been introduced, the details of which are as under:

Form No.

Applicability

ITR � 1

Meant for Individuals, who have

a)            Income from salary
b)            Interest income (taxable / exempt)
c)            Family pension
d)            Income from agricultural activities

In other words, this form is not applicable in the following situations:

a)            Individual having any income (taxable / exempt) other than mentioned above
b)            Any brought forward loss of earlier years
c)            Any income of other person to be included

ITR � 2

Individuals / HUF not having any income on account of carrying out business / profession or on account of being a partner in a partnership firm.

ITR � 3

Individuals / HUF who are partner in a partnership firm and does not carry out any other separate business / profession.

ITR - 4

Individuals / HUF who is carrying out business / profession under a proprietary concern.

Last date for filing tax returns

The last date for filing return of income for the year ended March 31, 2007 is July 31, 2007 and for individuals who are required to get their books of accounts audited under the Income Tax Act, it is October 31, 2007.

Consequences for not filing tax return by the last date

If individuals file their returns after the last date mentioned above, they will be charged a penal interest at the rate of 1% per month of delay. However, if such a return is filed after March 31, 2008, apart from the penal interest, they will also be liable for a penalty of Rs 5,000.

How to file the tax return

Today there are two options available to the individuals to file their return of income:

Under Electronic filing, the individual will have to follow the following procedure:

However if the file is uploaded without a digital signature, the individual will have to print form ITR-V and submit the same to the Income Tax department physically. The process of filing return will be completed only on physical filing of ITR-V.

For Physical filing, the individual will have to take a print out of the respective ITR form along with the Acknowledgment form and file it with the Income Tax Officer.

Whether it is electronic filing or physical filing, under the new procedure, individuals do not have to attach any documents or enclosures with the return of income.

Documents to preserve

Since the tax-payer is not required to submit any additional documents along with the return of income, the documents may be called at the later stage by the Income Tax Officer to check the correctness of the claim made. Hence, it is advised that the individual preserve all the documents required to substantiate the return of income filed. Some of the documents are enumerated below:

Common mistakes people make while filing tax returns

The author is Group Head-Direct Taxes and founder member of Taxsmile.com India Pvt. Ltd. He is a practicing chartered accountant with over 10 years of experience.

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