Each year there is a flurry of activity as people hustle to file their returns and put up with the mandatory e-filing process. The process is quite simple and can become a lot simpler if you focus on some important things to know about tax returns. Here is all about income tax returns and all you need to know about taxes. The 10 things are, of course, illustrative and not necessarily exhaustive.
1. You must use the right form and the latest version
There are different forms for filing tax returns. There is a different form if you only have salary and interest and another form if you have capital gains. For business income, there is a different form you need to file. Ensure that you have downloaded the latest version of the form from the Income Tax Website. Also ensure to use the right form applicable to you; else your tax returns can be rejected.
2. Know your due date for filing the tax returns
Due dates are important depending on what kind of returns you are filing. If you are filing for salary or other routine income then July 31st is the last date for filing returns. This normally gets extended by a couple of days but don’t count on that. File in advance to avoid last minute rush. In case you require tax audit to be done then you need to file the returns only September 30th. Effective this year, late returns can only be filed till 31st March of the next year, not beyond that.
3. TDS is not the same as filing tax returns
Even if your employer or client has deducted Tax Deduction at Source (TDS) and there is no tax due, you still need to file the statutory tax returns before the due date as long as your income is above the threshold. More so, in case of refund ensure that you make it a point to file returns on time; otherwise you are not entitled to refund.
4. You must link your Aadhar card with your PAN
You will find the newspapers and social media full of warnings about why linking your Aadhar card to your PAN card can compromise your personal data. Don’t believe that hogwash. The reality is that the Income Tax department has made it mandatory to link Aadhar to PAN and so it has to be done. And there is not data security that you need to worry about.
5. It is always better to verify your tax deduction with Form 26AS
Your employer may have deducted your tax but whether the said tax has been deposited with the Government or not is only evident when you check the Form 26AS. If you have online access to your secure Income Tax area (PAN is your login id), then you can directly check your Form 26AS. You can also access your Form 26AS through your bank account which is mapped to the said PAN. It is always better to check or else you must immediately take it up with your employer.
6. Schedule of assets and liabilities are required
From the current fiscal year, the Income Tax department will be asking you to furnish a lot more details like break up of interest, details of salary, statement of assets etc. Ensure that these details are properly filled up and also keep supporting documents available in case the IT department calls upon you to furnish proof.
7. Tax saving investment proofs must be submitted well in advance
This is a very important part of your tax planning routine. Normally, your payroll department will insist that all your tax saving proofs be submitted to the company latest by end of January. If you fail to do that then the company goes ahead and deducts the extra tax. Of course, you need not worry because you can still claim your refund from the IT department. To be on the safer side, ensure to submit all your tax saving proofs in advance.
8. When you get a tax notice don’t panic, but respond
There is nothing to worry about a tax notice. Majority of tax notices are for purely routine reasons. These include, wrong form used, details mismatch, TDS difference etc. When you get a notice it is your responsibility to respond to the notice within the deadlines specified. If you are required to present yourself before the assessing officer, then be available with all documentary proofs to underline your point.
9. Maintained detailed acknowledged tax returns for last 10 years
Make it a point to maintain the Form 16 copies, Form 26AS and actual acknowledged tax returns for a period of 10 years. This will ensure that in the event of any past dispute, you don’t have to run around searching for details. Also ensure that you have a physical copy, an offline copy and an online copy of these documents in a digital locker.
10. Your returns need to be e-verified
Once you file complete your returns and upload it, your job is not over. You need to verify your returns. There are different ways to verify your returns. Firstly, you can sign the printout of the acknowledgement and sent by registered post to the IT office in Bengaluru. Secondly, you can use your digital signature to sign the document. Lastly, you can now e-verify using a combination of your bank account and Aadhar card, which is by far the simplest.
Remember, a tax return is an important document for a variety of purposes. Take care of these 10 points and make your job easier.