Chartered accountants across India prepare for their busy season as 31 July nears. This is when the country's taxpayers gear up to file their income tax returns for the previous financial year. Every income earner must adhere to this deadline, except organizations and individuals that require auditing under section 44AB of the Income Tax Act 1961; the latter have a 30 September deadline.
Many of your salaried friends will tell you that the 31 July deadline does not really matter: you have a two-year window within which to file your returns. Hence, the ultimate last date by which you must declare your returns for financial year (FY) 2012-13 is 31 March 2015. Nevertheless, the best course is to declare your returns by 31 July 2013. Let me explain why:
1. Rectifying Errors - Regardless of who files your returns-you or your CA-there is the very real possibility of errors. Error revision is possible for returns filed by 31 July; thereafter, you lose the opportunity to make the required corrections.
2. Avoiding Penalty - Unpaid tax is even more reason to file your returns by 31 July. Delay and you will be charged simple interest of one percent on the unpaid tax. In some cases, you may be charged a penalty as well.
3. Carrying Forward Losses - Miss the 31 July deadline and you will not be able to carry forward losses incurred in equity and mutual fund investments. Consequently, since you cannot show the losses, you will not be able to get the corresponding tax exemption on your net income.
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4. Delay in Tax Refunds - Naturally, any delay in filing will result in a corresponding delay in your tax refunds being processed.
As you can see, it makes sense to file your tax returns on time. But now that 31 July is only days away, don't let the looming deadline stress you out. Hire a CA if you are unsure of the procedure. Keep in mind the following:
1. Use the Correct Form - Depending on your type of income, you will have to fill out a different form. Thus, a regular salaried employee or pensioner needs to submit either ITR1 or ITR2, a partner in a firm submits ITR3, and an independent professional submits ITR4 or ITR4S. Look through the guidelines to ensure that you submit the correct form; otherwise, your returns could be deemed invalid.
Also Read - Tax Return Simplified: Accuracy is the key
2. The Documents You Need - Employees must submit Form 16, while professionals have to submit Form 16A. Both these forms detail income, tax deductions, etc. In addition, one must submit Form 26AS, which offers details of the various kinds of tax deducted and deposited during the financial year in question. It is also necessary to provide documents bearing details of one's capital gains or losses, tax savings, housing loans, etc. in order to be eligible for tax deductions under like 80C, 80D and 80DD among others.
3. No More Exemptions - During the past two years, salaried persons earning up to Rs. 5 lakh per annum were exempt from having to file income tax returns. This exemption was offered because the income tax department was shifting from paper filing to e-filing. Now that the e-filing process has been made glitch-free, the exemption for those earning less than Rs. 5 lakh has been removed.
In Focus: Filing tax returns
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal
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