As another financial year passes and most individuals have completed their tax planning and tax deduction exercise, it is now the time to file your return. Of course, you still have time! The tax returns normally need to be filed by the last day of July each year. Here are 10 things that you need to know while filing your IT returns this year. Remember, you will be filing your IT returns for the financial year 2016-17 relevant to the Assessment Year 2017-18
10 things to remember when you file IT Returns
1. If you feel that filing your income tax returns is a painful formality, remember that this is your most important income document. You will need to submit copies of your IT returns whether you are buying a property, planning to get a visa to the United States, getting a personal loan or even applying for a credit card.
2. Remember that anyone with an annual income of over Rs.2.50 lakhs needs to file IT returns. The filing of IT returns has nothing to do with whether you have tax payable or not. Today, the IT department tracks your lifestyle expenses, asset purchases, investments and foreign travel through seamless linkage with your PAN card and Aadhar card. Do try to be absolutely transparent when you file your IT returns.
3. If you have not submitted your investment details and proofs in time to your employer, then the Finance Department may have deducted additional tax. Nothing to worry, as your tax-saving investments will not go waste. You can file those details in your Income Tax Returns and claim refund of excess tax deducted. Keep documentary proofs of your investments handy in case you are called upon to furnish proof for the same.
4. Remember, all sources of your income need to be filed as part of your IT returns. Your dividends may be tax-free and your interest may be within the tax-free limit. But it is still essential to disclose all these details in your IT returns. A very important fact about your short term and long term capital gains tax on shares. If you have made a loss on STCG, you need to show the loss when you file returns. If you do not disclose the loss in your IT returns, you actually lose the benefit of setting off the losses against other gains and also lose the benefit of carrying forward these losses for a period of 8 years.
5. Today, thanks to online tax filing and record maintenance, you can download the Form 16 from the IT department website and also the TDS certificate with the TAN of your employer. The TDS certificate uploaded on the IT website is your conclusive proof that the tax deducted from you has actually been paid by your employer into the government account. Make it a point to reconcile your tax deduction statement given by your HR department with the TDS certificate issued by the IT department every quarter. This is better known as Form 26AS.
6. If your annual income is above Rs.50 lakhs, then you also need to furnish full details of your investments and property holdings. Such asset and investment reports should be backed by original purchase documents which will serve as proof of valuation. Also remember to disclose if you have received any income from abroad. Learn understanding of Commodities
7. Remember that today you are required to file your returns online by uploading the details on the website of the Income Tax department. What is more important to know is that your job does not end with filing and uploading the returns. The returns need to be e-verified. Today you can e-verify your tax return online by linking it to your registered bank account having the same name details. Only after e-verification is the process of filing tax returns completed.
8. Your tax returns will either result in no refund or may also result in a refund claim. Refunds up to Rs.50,000/- are refunded by the IT department online and directly credited to your mandated bank account via RTGS. But refunds above Rs.50,000 are only paid out by cheque. Hence if your refund is above Rs.50,000/- ensure that your address is updated in the IT records. You can also login in online using PAN and update your address where you want to receive your refund cheque.
9. Effective, July 01st 2017, an Aadhar Card is a pre-requisite for filing your IT returns. You must not only ensure that you have an Aadhar card but also ensure that your Aadhar card and your IT PAN are mapped to each other. While taking your Aadhar card, always ensure that your name is in the same order as in the PAN card. Effective this year, you will not be permitted to file returns without quoting your Aadhar card number.
10. Lastly, what happens if you forget to file returns before the due date of July 31st. There are two situations you need to consider. If you do not have any tax payable then you can file the returns by March 31st next year. But refund cases will not be entertained if you file your returns after the cut-off date of July 31st. Also, if you have tax outstanding then they will attract additional penalty. Above all, carry forward of losses and set-off in future years will not be permitted if you file your returns after the due date.
One thing you need to ensure is not to wait till the last day to file your returns. The last minute rush typically results in server downtime and upload delays. These can be avoided by doing these things a little earlier. Filing returns is not only your duty but also the key to creating a very important audit trail of your income. Some basic checks and balances can help you do a neat job of it.