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Tuesday, April 24, 2012

How you will file your Tax Returns

You will soon get the Form 16 with details of your income and taxes paid from your employer. Then you have a couple of months to file your tax returns. However, the Central Board of Direct Taxes (CBDT) has issued a notification which has made it mandatory for individuals earning an annual income in excess of Rs 10 lakh to file their returns online from the current financial year. Until now, an individual with income above 10 lakh had the choice of filing income-tax returns either online or through an auditor/chartered accountant.

Individuals earning over Rs 10 lakh salaried income

"It is now mandatory for individuals with total income above Rs 10 lakh to file their personal tax returns online through the income-tax website," says Vineet Agarwal, director, KPMG. This new notification is applicable to individuals and Hindu Undivided Family (HUF) taxpayers as well.

Online tax filing definitely comes with certain advantages. You can e-file the returns from home or office anytime. Moreover, it is easier to track refunds which will be either transferred electronically to the bank account or will be sent by cheque.

But don't wait till the last week of July to e-file your returns. Send signed ITR V form to the Centralised Processing Centre, Bangalore, as soon as possible and resend the same if you do not receive a confirmation for the one sent earlier. The income-tax department's e-filing website becomes almost inaccessible (due to server overload) during the last few days of July. In such cases you have the option of filing your e-return through other private tax filing portals.

"Further, resident individuals having assets abroad (including authority to sign a bank account held abroad) are compulsorily required to file their returns electronically for AY 2012-13 and for subsequent assessment years as well," says Vaibhav Sankla, director-business development and tax training, H&R Block India.

Individuals earning up to Rs 5 lakh annual income

As per the Notification, only individuals who satisfy the following conditions are eligible for exemption from furnishing returns for tax year 2011-12:

a) Total income does not exceed Rs 500,000.

b) Total income consists only of income under the following heads:

- 'Salaries'

- 'Income from other sources' by way of interest, not exceeding Rs 10,000, from a savings bank account

"Apart from the above conditions, ensure that you report your Permanent Account Number (PAN), savings bank account interest income to your employer and the employer should withhold tax on such interest income," says Amarpal Chadha, tax partner at Ernst & Young.

Also, the employer should provide the tax withholding certificate (Form 16) to the employee which mentions the PAN, details of income and taxes withheld. "Moreover, there should be no further tax payable by employee by way of advance tax or self-assessment tax, no refund claim for the relevant tax year and the employee should receive salary from only one employer for the tax year," says Chadha.

Individuals in Rs 5-10 lakh bracket

There has not been any change in tax filing for individuals falling in this income category. They have the option of filing returns either manually or electronically.

Compared to offline filing, e-filing is the indeed hassle free. Firstly, the Sahaj form has too many specifications. The logic behind introducing such specifications is to facilitate easier processing of forms for the I-T department, given the sheer increase in the volume of tax payers in the country.

Just to quote one example, the form has some colour specifications which mean the tax payer has to find a colour printer to take a printout of the form prior to submission. Under such circumstances, it only benefits the tax payer to opt for e-filing. "However, beware of emails that feature a link to the income-tax office website. These should be carefully evaluated as it may be intended to steal your sensitive personal information like credit card/bank details," cautions Vineet Agarwal of KPMG.

For Self-employed Professionals

The notification with regard to exemption from furnishing returns for tax year 2011-12 is applicable to those individuals where total income consists only of incomes under the following heads: 'Salaries'. Also, it mentioned 'Income from other sources' by way of interest, not exceeding Rs 10,000, from a savings bank account. This automatically rules out self-employed professionals. "However, the notification with regard to mandatory e-filing is applicable to an individual or HUF having total income exceeding Rs 10 lakh. Hence, self-employed individuals will also be covered under this notification," says Vaibhav Sankla.

Source:-The Economic Times

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