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Have you chosen the right tax form?
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June 01, 2007

Do you know that there are two versions of income tax return form, ITR-1? Do you know which one to use to file your returns?

Are annexures allowed for ITR-1? Simply put, do you have to attach any documents with the new ITR-1 form if you are a salaried individual?

When do you become eligible to use ITR-3 and ITR-4 to file your tax returns?

Finally, are you still confused if you can use Saral* or Form 2D* instead of ITR-1 to file your returns for the financial year 2007-08?

In a chat with readers on May 30, Get Ahead tax expert Mahesh Padmanabhan answered these and many more queries related to the new income tax forms that the government issued on May 14.

For those of you who missed the chat, here is the transcript.

Part I: Your queries on the new tax forms answered

zaza asked, Hi, I am working in a software company. I did not show my investment proof. So in my company they deducted tax. After that I invested in the month of March. I know I am eligible for 80C exemption. But how do I claim my refund while filing returns? My TDS doesn't show any refund amount.

Do I have to annex my investment receipts along with my TDS while filing my returns? Is annexure allowed for ITR1 form?

Mahesh Padmanabhan answers, Yes, you can claim the deduction for the investment made by you before the year end that has not been considered by your employer. You would need to attach the copy of such proof of investment along with the return form. In case of online filing with a digital signature, you would not be required to submit such documents. In case of a scrutiny however, you would be required to submit such proofs

taexpert asked, Sir, On the IT departments website there are two versions of ITR1: one of 2 pages and the other of 3 pages. Which one should an individual use?

Mahesh Padmanabhan answers, You can use version 2.

gv asked, The new ITR-3 is for individuals/HUF's being partners in firms and not carrying out business or profession under any proprietorship. In case of an indivdual who is a partner as well as proprietor which form is to be submitted? Please advice.

Mahesh Padmanabhan answers, You could use ITR 4 in such a case.

SONTHALIA asked, I have income from salary and dividend income. Should I file ITR-1 or ITR-2?

Mahesh Padmanabhan answers, You could use ITR 2.

Nikhil asked, Sir presently I am working in UAE. Is it compulsory for me to file return in India during my tenure of working in UAE?

Mahesh Padmanabhan answers, In case you do not have taxable income in India exceeding the prescribed limits, you need not file your returns here in India.

taxreturnPune asked, Dear Sir, I am a salaried person, I had claimed principal and interest on home loan for tax deduction. Which form I need to submit for IT return. Will it be ITR2?

Mahesh Padmanabhan answers, Yes you can use ITR 2.

nandawat asked, Where can I see the format of new ITR-1?

Mahesh Padmanabhan answers, You could get the same on

Sagar asked, My annual salary is Rs 150,000. Since I don't have any loans it was quite easy for me to do some investment. So I opened a demat account and invested part of my savings in shares. Start of the month I earned small profits and very next month I lost some and in my 3rd month I earned some good profits & till now I'm still continuing with the same.

From last 4 months I did only trading. According to me overall trading transaction (buying & selling) was approximately Rs 95,000. So while filing my returns I want show my demat transaction too. So what will be my taxable amount figure only for the demat account?

About my salary I have got my yearly tax deducted from my March Salary. I'm worried only about demat for this will be my 1st filing of IT returns. Please help.

Mahesh Padmanabhan answers, Though your question is unclear, in my opinion here's what you need to do:

~ Segregate your transactions into speculative nature transactions (that is, buy & sell in the same day or intra day trading) and regular trading transactions.

~ In case of regular trading transactions, work out the overall capital gains / loss (based on long term & short term holding period).

~ In case of speculative transactions, work out the net gain or loss. Once you are through with this working, prepare the tax computation for the overall income.

Mural asked, Dear Sir, please let me know is it necessary to enclose the medical bills for Section 80DDB where in Rs 40,000 can be claimed? Kindly advice.

Mahesh Padmanabhan answers, No, you need not provide the bills, but you would need to attach the certificate from the appropriate medical authority.

CARahul asked, Dear Mahesh Sir, I would like to correct you sir Old Return Form Saral /2D* cannot be used for A.Y. 2007-08. It is compulsory to file new ITR kindly refer notification issued on 14/5/2007.

Mahesh Padmanabhan answers, Notification no 169/2007 dated 14-5-2007 talks of the return formats. You could get a confirmation on the usage of the regular Saral form / 2D* forms for the current year from your local IT PRO. I still hold the opinion based on ground realities that Form 2D / Saral* can be used this year.

Mahesh Padmanabhan says, Dear friends, thanks for being available for this chat session and I hope most of you might have got your queries answered through representative queries being answered. Thanks again and have a good day.

*There is an update in terms of the last chat on Wednesday May 30, 2007. I (Mahesh Padmanabhan) had mentioned that the old Saral forms / Form 2D is currently being accepted by the income tax department. Whereas this was based on the information made available from the PRO office of the income tax department, the current status is that the old forms have been discontinued and only the new ITRs are being accepted.

Part I -- Your queries on the new tax forms answered

Mahesh Padmanabhan is principal advisor -- direct taxes group, RelaxWithTax Consultants Pvt Ltd, a Mumbai-based personal taxation and finance solutions provider.

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