The tax laws in India are perceived to be complicated by all. Having said that, the government of India, along with the Central Board of Direct Taxes (CBDT), has over the years tried to make tax compliance simpler for the taxpayers. It is important to note that paying the taxes due and filing tax returns is everyone’s duty as well as responsibility towards building the nation of our dreams.
With the due date for filing your income tax return for the Financial Year 2021-22, i.e., Assessment Year 2022-23, just round the corner, we bring to you a few pointers while filing your tax return, which can ensure that your tax filing process is smooth and hassle-free:
1. Assessees for whom the due date of 31st July is applicable:
All assesees, except the following, are required to file their returns on or before 31st July:
- Assessees who are subject to a tax audit and/or transfer pricing.
- Partners of Partnership Firms/LLP to whom tax audit and/or transfer pricing is applicable.
- A company.
- Any person whose accounts are required to be audited under any other law.
2. Income Tax Website and Account:
- To file your income tax returns, you need to visit the Income Tax website at https://www.incometax.gov.in
- If you are a first-time filer, you will have to register yourself by clicking on the “Register” tab at the top right corner of the ‘’Home’’
- If you are a registered user, you can click on the “Login” tab at the top right corner of the home page.
- Your Permanent Account Number [PAN] is the default user ID to login to the income tax portal.
3. Sources of Income:
As per the tax laws in India, there are primarily, 5 sources of income, which are explained as under:
- Income from Salaries: If you are a salaried employee, your income will be chargeable under this category. Furthermore, pensions earned by retired people will be taxed under this head. Also, taxable portion of the gratuity earned on retirement and leave encashments received from employers, is also taxed under this head. Please ensure you have your Form 16 received from your employer handy while you proceed to file your tax returns.
- Income from House Property: The rentals earned from your house property rented out is taxable under this head. Further, if you own multiple house properties which are not let out, each of such house properties, other than one self-occupied house property, shall be deemed to be let out and a notional rental shall be considered as income. You would be allowed to reduce from the aforesaid rentals, the municipal taxes paid during the year towards the said let-out properties. Further, there would be a statutory deduction of a flat 30% from the net income of each house property. The interest component of your housing loan EMI paid on your housing loan will be reduced up to a maximum of Rs. 2 Lakhs from the said income.
- Income from Business and Profession: If you own a business or are a professional, your net profits will be taxed under this head. It is advisable to reconcile the turnover as per books of accounts and as per the Goods and Services Tax [GST] returns filed during the year.
- Income from Capital Gains: If you have sold any shares, mutual funds, bonds, land, commercial or residential property, or any other capital asset during the year, the net gains, i.e., sale price less cost/indexed cost of acquisition of the same, shall be taxable under this head, unless you have made an eligible reinvestment, which gives you exemption from the capital gain tax. It is to be noted that a ‘’switch out’’ from a mutual fund scheme and a ‘’switch into’’ another mutual fund scheme is also a taxable transfer on which capital gains tax is required to be paid. It is advisable to obtain a capital gain statement from your broker or download it from the application/software used to transact in shares and mutual funds, to help you calculate the long-term and short-term capital gains amounts.
Long-term capital losses can only be set off against long-term capital gains in the event of a loss; however, short-term capital losses can be set off against both long-term and short-term capital gains. Unexhausted losses can be carried forward for the next eight assessment years.
5. Income from other sources: This head of income is a residual head where incomes such as dividends, bank interest, etc. are taxed.
It is critical to scrutinise all your bank statements thoroughly and verify the income received during the year and also obtain relevant interest certificates from the bank to enable you to compute the due taxes appropriately.
4. New Regime vs. Old Regime:
It is necessary to estimate your tax liability, both as per the old regime and the new regime, at the beginning of the financial year itself, to enable you to plan your taxes accordingly. Having said that, the Income Tax Department has clarified that you may, while filing your tax returns, select an option different from the option selected while filing your declarations and providing investment details to your employer.
5. Treatment of losses:
In the event the return is not filed by the due date, you will not be allowed to carry forward losses from business, capital gains, and activity of owning and maintaining racehorses. However, losses from house property and unabsorbed depreciation can be carried forward even if the return is filed belatedly.
6. Return Form vis-a-vis Sources of Income:
Following are the ITR forms to be filed for the corresponding incomes:
- ITR 1 – For residents with a total income of up to Rs.50 lakh from salaries, one house property, or other sources.
- ITR 2 – For individuals and HUFs not having income from profits and gains of business or profession.
- ITR 3 – For individuals and HUFs having income from profits and gains in business or profession.
- ITR 4 – For Individuals, HUFs and Firms (other than LLPs) being a resident having total income up to Rs.50 lakh and income from business and profession computed under sections 44AD, 44ADA or 44AE (Presumptive Income).
- ITR 5 – For persons other than- (i) individual, (ii) HUF, (iii) company and (iv) charitable trust, NGOs and similar organisations.
You can file the online utility of the aforesaid forms by logging into your income tax portal and clicking on E-File > Income Tax Returns > File Income Tax Return > Assessment Year – 2022-23 > Mode of filing: Online. You can also download the common Java utility for ITR 1 to 4 or ITR 5 from the Download tab on the income tax website, fill it in and submit it. The Income Tax Department also gives you the option to pre-fill your return using the data filed in the previous year by clicking on E-File > Income Tax Returns > Download Prefilled Data. Before submitting your return for the year, you must reconcile the information being submitted with the pre-filled data that is available on the portal against each assessee’s name, to ensure its correctness and also make necessary changes, wherever necessary.
7. Form No. 26AS and Annual Information Statement (AIS):
Before starting with the process of filling in details of income in the return of income, you should download Form No. 26AS from E-File > Income Tax Returns > View Form 26AS > click ‘view tax credit (form 26AS) < Assessment Year 2022-23 – View as HTML < Export as PDF, so as to ensure that all the incomes on which Tax Deducted at Source [TDS] has been deducted and the corresponding TDS amounts, are taken into consideration while calculating your taxes. In case Tax Collected at Source [TCS] has been collected from you, the credit for that will be taken into account when calculating your tax payable.
Further, you need to download the AIS on the tab Services > Annual Information Statement (AIS), which has the information of various transactions reported to the Income Tax Department during the year. The same shall be taken into consideration, to the extent applicable, while computing the taxability during the year. (The password to open the AIS is your PAN in small case followed by your date of birth; eg: aaapa1111f15121960).
8. Deductions under Chapter VI A (80C, 80G, 80D, etc):
All the eligible deductions under Chapter VIA of the Income Tax Act 1961 [Act] can be claimed while filing the return of income, even if the same were inadvertently left out while making declarations, or while submitting actual proof of the same to the employer, for consideration on Form 16. The excess TDS deducted by the employers, consequently, can be claimed back as a refund.
9. Payment of Self-Assessment tax and Credit of Taxes Paid:
The taxes paid in the form of Advance Tax and TDS/TCS shall be available as a credit against the tax, cess, surcharge and interest as computed on the total income and the balance amount payable along with interest thereon shall be paid as self-assessment tax using challan 280 on https://www.tin-nsdl.com.
10. Consequence of late filing or non-filing of Income Tax Returns:
In case a taxpayer fails to file the return within the normal due date applicable to him, a penalty of Rs. 5,000 would be levied if the return is filed past the due date but before December 31st. In other cases, the fine could be up to Rs. 10,000. However, in the case of willful defaulters, failing to file the return can lead to a fine and even imprisonment.
11. Verification of the tax returns:
The return filed online needs to be verified by the taxpayer within 120 days from the date of filing. The tax return can be e-verified using the Aadhar OTP, Electronic Verification Code (EVC), or by using your net banking account with selected banks. If none of these options work, you may send a signed copy of the acknowledgment to CPC Bangalore. A tax return filed but not verified is treated as an invalid return by the I.T. department. It would mean that you have not filed the return at all.
12. Donations made to charitable institutions are eligible for deduction u/s 80G:
If you have made donations to charitable institutions and wish to claim a deduction for the same u/s 80G of the Act, kindly ensure such institutions have reported your donations to the Income Tax Department and obtained a certificate of donation on Form No. 10BE.
- If your total income does not exceed Rs. 2,50,000 no tax is due. Further, if your total income does not exceed Rs. 5,00,000, you are eligible to claim a rebate u/s 87A to the extent of Rs. 12,500/-, which effectively would result in nil tax payable.
- For non-resident taxpayers, only their Indian income is chargeable to tax in India.
- In cases where Indian tax residents own foreign assets, including shares of foreign companies, foreign bank accounts, etc., the same needs to be disclosed in their income tax returns.
- Every individual having a total income of over Rs 50 Lakh is required to give a list of his/her assets and liabilities at cost while filing his/her tax returns.
- Though clarity on taxing crypto currencies came vide Finance Act 2022, the sale of crypto currencies prior to Finance Act 2022 would also be chargeable to tax as per the prevailing law. You may need to seek a detailed opinion if you have traded in crypto currencies and made a profit thereon.
- If you are a legal heir to a taxpayer who has died during the year and has earned taxable income or is required to file his/her tax returns as per the law, you are required to register yourself as a ‘legal heir’ to such a deceased taxpayer through your Income Tax portal and file his/her tax return through your income tax portal using his/her PAN.
For further advice and detailed assistance in filing your Income tax returns kindly contact our following Fox Mandal and Associates representatives:
Sandip Mukherjee – firstname.lastname@example.org
Salusalini Jha – email@example.com
Nikhil Bhise – firstname.lastname@example.org
Akshita Bhandari – email@example.com
With the due date for filing your income tax return for the Financial Year 2021-22, i.e., Assessment Year 2022-23, just round the corner, we bring to you a few pointers while filing your tax return, which can ensure that your tax filing process is smooth and hassle-free.