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Get ready to file tax returns
Though the government is yet to notify the new form, begin with collating documents, checking interest certificates and tallying form 26AS
Vaibhav Sankla, director of H&R Block, a Pune-based tax consultancy firm, recalls some of his colleagues had to re-file income tax returns. "This was largely because they were confused between assessment year and financial year, and had filed returns for the previous year. Assessment year 2012-13 would mean financial year 2011-12; most identify with a financial year, not an assessment year," says Sankla. This is a common mistake by those who file returns on their own.
The period between the last quarter of a financial year and July 31 of the next financial year keeps many on tenterhooks - this is the 'tax period'. Your chartered accountant keeps reminding you. Yet, owing to many mistakes taxpayers make, have to re-file returns.
Some say the convenience of filing returns online often tends to delay returns; the due date passes, leading to interest and penalty on the taxpayer. It also restricts the ability to carry forward losses to be set off against future income. Also, much-delayed returns might result in your name appearing on the scrutiny letter of tax authorities, and they might seek an explanation. You might have to do away with your refunds, if any.
For financial year 2012-13, the deadline for filing returns is July 31.
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Get ready to file tax returns
New ITR form
Every year, a new ITR form is notified by the government by the end of March. For this year, it has not been notified yet (till the time of going to press). This means even if you want to file your returns now, you cannot do so.
However, a positive aspect is the government could extend the deadline for filing tax returns for those opting to file returns electronically or e-file those, as it has done in the past two years.
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Get ready to file tax returns
Prepare for the filing season
Here's how you can prepare for filing returns this time. "Prepare a list containing streams and amount of income earned in FY2012-13. Get Form 16 (Part A and B) and Form 12BA from the employer, if you earned taxable salary income. Otherwise, Form 16AA or a salary statement would do. Get Form 16A if TDS (tax deducted at source) has been deducted from income other than salary.
Obtain interest certificate from banks/other institutions where TDS is not deducted by them. These will help see the income received in that account. Similarly, examine broker notes/other documents carefully to ascertain capital gains, exemptions on reinvestments and so on," says Parizad Sirwalla, partner (tax) at KPMG.
Many do not keep investment/tax documents carefully. Collate all documents relating to investments and pay balance taxes, along with interest, if any, before filing returns. If you have travelled abroad, ascertain the number of days (physically) spent in India to determine your residential status before filing returns.
Download the Tax Credit Statement or Form 26AS from the TRACES website, suggests Sankla. From November 1, 2012, generating this form through NSDL has been discontinued. Once you've downloaded the form, compare it with your Form 16A and other TDS certificates.
This would help you ascertain whether all the TDS details are updated in the form. If the details aren't updated, you would have to furnish these with the returns or update the form. This would also show if your employer has filed the TDS deducted from your salary. If employers don't do so, employees are pulled up for non-payment. Through the past few months, many have experienced this.
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Get ready to file tax returns
However, this problem might soon be resolved. Kuldip Kumar, executive director (tax & regulatory services), PricewaterhouseCoopers, says, "Now, TDS deductors or employers may need to download part A of Form 16 from TRACES and issue it to the deductee, after due verification.
This means the deductor would have to give accurate details." The Central Board of Direct Taxes has mandated TDS deductors to issue part A of Form 16 for deductions made on or after April 1, 2012, by generating it online. Part B would have to be prepared by the deductor manually and issued to the deductee after due authentication and verification with Part A.
If the ITR forms had been notified, you could have checked which one was applicable for you; returns should be filed through the correct form alone. This form is chosen according to your income stream. However, taxpayers often make mistakes here, too.
For instance, for assessment year 2012-13, ITR-1 was for those who earned from salary/pension, a house property and other sources (excluding lottery and horse races). ITR-2 was for those with income streams similar to those under ITR-1, as well as income from capital gains. If the form you select is incorrect, the returns might be considered invalid/defective.
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Get ready to file tax returns
What to be careful about
Start with checking your Permanent Account Number (PAN) on the ITR, as it could be incorrect, leading to un-filed returns against your name. "Check your name as well. Married women who get their name changed at banks should change these on the PAN as well; otherwise, it would be a mismatch of returns," he warns.
If you have changed your job during the financial year concerned, be careful about your returns. Experts say if you share your old salary/deduction details with the new employer, employers tend to calculate tax based on the new, as well as the old salary details, which should not happen.
Though you might feel the slab rates apply to your salaries from both employers individually, this isn't true, as you can get slab benefit only once; the difference, if any, has to be paid by way of self-assessment tax.
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Get ready to file tax returns
Ensure you fill the gross salary amount in the correct column. Many fill gross salary details in the taxable salary column in Form 16, though the two are very different. Disclose the interest income earned on fixed deposits and savings accounts.
Also disclose the gifts received, if any, worth more than Rs 50,000 in cash, under Section 56, as well as more than one house, if this is the case. Remember, you need to pay tax on all let-out properties (not self-occupied), whether it is let out or not (even if it is the first property but not self-occupied. Also pay wealth tax and declare foreign assets.
Specify details such as the deduction being claimed under various sections---50 per cent or 100 per cent, otherwise claims are rejected. Additionally, capital gain, if any, is calculated based on the date it arose. If this is not clearly mentioned in the returns, a penalty could be levied, warns Sharad Shah, partner (tax advisory services) at BDO Haribhakti Consulting. Also, mention the capital losses if these are carried forward in the returns. Without this, you may not be allowed to claim it next year, says Vineet Agarwal, director, KPMG.
Remember, filing e-returns, too, isn't very easy.
