NEW DELHI: If you have not yet filed your income tax return (ITR), the tax department might have already spammed your inbox with messages and mails reminding you that the deadline is approaching.
As we enter the last 10 days of the year, and the last date of filing returns being 31 December, it is time you pay heed to the repeated reminders of the income tax department and file your returns.
However, since you have already delayed the filing, it is quite likely you may not just face frequent technical glitches on the website -as e-filing website do see last minute rush leading to crashing of the site - but also difficulty in getting all your documents in place.
Invariably, in the last-minute rush one can make some mistakes in filing returns.So, in case you are one of those not yet filed your returns, keep the following in mind before filing returns:
Use the correct ITR form: This is the most common error one may commit especially if you are filing on your own and have delayed it to the last moment.
Usually, for those who have only salary as a source of income, things become simpler. But if you have multiple sources of income, like dividend, capital gains, business income, income from house rent, etc, you have to be careful while choosing the ITR form.
For example, if you have income from only one house property apart from your salary and interest income, you have to file ITR-1 form. However, if you have income from multiple house properties, you have to file ITR -2/3/4 depending on other sources of income.
“Submitting a return on the wrong form might result in a variety of consequences,” says Rajat Mohan, partner in chartered accountancy firm AMRG & Associates.
Keep income/expense documents handy: To correctly file the return, you must have all the income support documents in hand - Form 16 for salary income, Form 16A for non-salary income, documents for savings bank interest, and other sources of income.
Similarly, you should have with you all the documents for expenses and deductions you are eligible to claim. If you have a home loan, and you are paying both interest and principal, you should get an income tax certificate from your bank providing proof of your interest expense and principal repayment.
“Though the recently introduced tax utility pre-fills certain elements and work as a handy tool for completing an individual assessee’s return of income but there are number of nuances that have yet to be recorded or left neglected in the utility form, which necessitate the assessee’s special attention,” says Rajat Mohan of AMRG & Associates.
Review and reconciliation of transactions reported in Annual Information Statement: The newly introduced Annual Information Statement (AIS) gives a comprehensive view of the transaction reported in Form 26AS.
Form 26AS gives details of all the taxes you have paid - TDS, advance tax, etc. While filing the return, you should be able to reconcile the income filed in ITR with that in form 26AS and Annual Information Statement.
Comparison of income taxable as per new scheme vs old scheme: While filing return, the website would ask you if you want to file income tax return under new tax regime or old tax regime. This could be tricky, and you have to be careful while choosing the new scheme as once you have chosen the new scheme, you cannot go back to the old scheme.
Typically, if you have several deductions to claim, you might find the old scheme saving more taxes than the new regime, even if under the latter tax rates have been reduced. So, don’t choose the ‘wrong’ option in the rush to filing your return on time.
Disclosure of asset & liabilities: If your total income exceeds `50 lakh, you have to disclose all assets — whether bought by yourself, inherited or gifted — and liabilities incurred against those assets.
While reporting these assets, the trick could be correctly valuing the assets. If you have not bought the asset yourself and have been gifted to you, and you don’t know the purchase price, it is better to value the asset at its fair market value to avoid any inconveniences later.
Correct classification of income from trading in shares, futures & options: Not everyone who trade in stocks and Futures and Options may treat the income from such activities as capital gains.
A significant income from such activities may be treated as business income, and accordingly the ITR form can be selected while filing returns.
As the last date for filing returns approaches, it is advisable to not leave the filing of ITR till the last week. The government has already given many extensions and it is unlikely that they would give another extension. So, file your return in a day or two and escape possible penalties for not filing the returns on time.
Cost of not filing ITR on time
Penalty:
Rs 1,000 for those who have total income below Rs 5 lakh; Rs 5,000 for those who have total income of Rs 5 lakh or more
Interest:
You would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid.
Delay in refund:
If you have paid excess tax than you are required to in a particular financial year, you are eligible for refunds. If you delay the filing of returns, your money remains stuck with the tax department
Less time for revising return:
If you have made errors in filing returns, you have time till the end of assessment year to revise the ITR. The more you delay the process of filing returns, the less time you get to revise your return