It is that time of the year when you have to file tax returns. It can be done either online or offline. However, financial year 2012-13 onwards, online filing is mandatory for those earning more than Rs 5 lakh yearly. The process is simple. All you have to do is choose the relevant income tax return (ITR) form and fill it online.
Remember that apart from salary, you have to include interest income, capital gains or any other source of income while calculating your tax.
If you think you don't need to file the tax return because your only source of income is salary and the entire tax has been deducted at source, that is not the case. A tax return is a generally accepted proof of tax compliance for various purposes such as bank account opening, passport renewal, applying for loans, etc. Besides, if you have assets abroad, you will need to file a return.
While the penalty for not filing income tax is only Rs 5,000, the failure to do so will result in your being shown as a 'defaulter' in government records, warns Rakesh Nangia, managing director, Nangia and Company, a chartered accountancy firm.
Let us look at the various steps involved in filing tax returns:
The documents will depend on the various sources of income an individual has. For instance, if you have salary income, you will need the salary certificate in Form 16 and 12BA from your employer. In case details of your rent receipts for claiming House Rent Allowance is not captured in Form 16, keep those ready.
If self-employed, the taxpayer should refer to the final balance sheet and profit and loss account.
In the case of a capital asset, you should have relevant agreements related to purchase and sale of such assets. If you have income from other sources, you should have the documents containing income particulars. You will also need receipts of municipal tax and the housing loan interest certificate from the bank or lender if you have income under the head of House Property income.
If you wish to avail of any deduction towards contributions made for charitable causes, keep those receipts ready while filling the income tax return form.
Further, if you wish to avail of any deduction (including deduction apart from what had been availed - for example donations made during the financial year), the receipt/proof of making payment would be required. For any tax collected at source, make sure you collect the relevant Form 16A from the payer of income. Also, nowadays Form 26AS or the Tax Credit Statement can be downloaded from the tax department's website to assess the amounts of prepaid tax.
Choose the right ITR form
Go to the income tax department's incometaxindiaefiling.gov.in/e-filing and choose the right ITR form, depending on your source of income.
There are ITR 1,2,3,4, and 4S. The various sources of income can include salary, pension, interest income, family pension, income or loss from other sources, income or loss from house property, capital gains or loss on sale of investment or property and so on. There are different forms for individuals and Hindu Undivided Families. You can also check the tax amount by using the calculator available on the e-filing website. If you have clubbing of minor income, foreign assets and carry-forward losses, then there are separate schedules for each of these in the respective forms. It is mandatory to mention the IFSC code of the bank in the tax return form.
Filling the form
If your income is less than Rs 5 lakh per annum, you can fill the ITR physically. But if your income is more than that, it is mandatory to fill it electronically. For electronic filing, you can fill it offline and upload the XML file. For this, download the relevant ITR form from the website, fill it offline, generate XML and save it on your desktop, register on e-filing website using your PAN, login to the portal, go to e-file-Income Tax Return-upload return.
You can also fill the ITR online and then file it. If you upload the return with a digital signature, the acknowledgment generated should be retained as final proof and nothing else is required. You can generate a digital signature through websites which are licensed as certifying authorities by the Government of India.
If the return is uploaded without attaching a digital signature, the acknowledgment generated has to be signed in blue ink only and sent to the CPC Bangalore by Speed Post or general post.
Websites which offer this service
Most websites that offer this service, charge Rs 100-200. In case you face difficulty in downloading the software required to fill and upload the form on the department's website, you can do it from websites that offer the same service.
How to send the ITR to Bangalore
There are certain rules to be followed even while sending the ITR to Bangalore. You must use only an ink jet or laser printer to print the ITR form. Do not use a dot matrix printer. It should be printed only in black ink. Do not print any watermarks on the ITR. The only permissible watermark is that of Income Tax Department, printed automatically on each ITR. The document should be mailed to the CPC in original. Remember to sign the document in original, photocopy of signatures will not be accepted. Only A4 size white paper should be used. The bar code and numbers below barcode should be clearly visible. Avoid typing anything on the reverse side of the paper. Do not file any annexures, covering letter, or pre-stamped envelopes along with ITR. ITRs that do not conform to the above specifications may get rejected or acknowledgment of receipt may get delayed. You must send the ITR to Bangalore within 120 days from the date of uploading the return. Otherwise, your return could be treated as not filed.
If you make an error while filing the return
If you make an error while filing the return, you can follow the same procedure to file a revised return. And, in case you are sending the original and revised returns, make sure you do not staple these together.
Common mistakes to avoid
Some common mistakes which you should avoid are - choosing the wrong form, filing the wrong PAN number and not signing the ITR before sending it to the CPC in Bangalore. You should also remember to claim relief for items, which are available from FY13 - deduction of up to Rs 10,000 on interest on savings bank account, investment in Rajiv Gandhi Equity Savings Scheme and so on.