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5 things to remember while filing income tax returns

It’s that time of the year again when you have to go through the annual ritual of filing income tax returns (ITRs). You can file your ITR for the financial year (FY) 2016-17 by 31 July 2017, else it will be considered a belated return. Irrespective of whether your income is in the taxable slabs or not, ideally you should file the return. Here are five things to know when you file your ITR this year.

Change in ITR Forms

To simplify the process of filing ITRs, the Central Board of Direct Taxes (CBDT) has made some amendments in the forms. For the current assessment year (AY), there are seven ITR forms, instead of the nine that were there earlier.Three of the earlier ITR forms—ITR-2, ITR-2A and ITR-3—have been rationalized and a single ITR-2 form has replaced them. Consequently, ITR-4 and ITR-4S (Sugam) have been renumbered as ITR-3 and ITR-4 (Sugam), respectively.

“The New ITR- 1 (Sahaj) form is a one-page form and it can only be filed by an individual with (taxable) income of up to Rs50 lakh a year. This will include salary income, interest income and income from one house property,” said Abhishek Soni, chief executive officer and co-founder of Tax2win.in. “Those who have income of more than Rs50 lakh or own more than one house property, they will have to file ITR-2 form,” he added.

Apart from this, various parts of ITR-1 (Sahaj) form—relating to tax computation and deduction—have been rationalized. Hence, the only deductions specified are “sections, as only sections 80C, 80D, 80G and 80TTA…and the rest need to be mentioned in the ‘others’ box,” said Suraj Nangia, partner, Nangia & Co. LLP.

Quoting Aadhaar

The Finance Act, 2017, made it mandatory to quote Aadhaar to file an ITR, with effect from 1 July 2017. While the decision was challenged in the Supreme Court, the apex court allowed the decision of the government. “You have to mention the 12-digit Aadhaar number or the 28-digit Aadhaar enrolment number while filing the income tax return. Till last year, it was optional to mention the Aadhaar number while filing returns,” said Nangia.

To link your Aadhaar with your Permanent Account Number (PAN), just go to www.incometaxindiaefiling.gov.in and click the “Link Aadhaar” tab on the website. Next, provide the PAN and Aadhaar number, in the “Name” column enter your name exactly as it is in your Aadhaar record, and then submit. After verification of details from the Unique Identification Authority of India (UIDAI), the linking will be confirmed.

New sections in ITR forms

“Dividend income was previously exempt from tax in the hands of the assessee, irrespective of the amount of dividend received. But now dividend income of more than Rs10 lakh will be taxable at the rate of 10% and it is required to be reported in schedule OS,” said Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP.

Apart from divided income, “income received by a person in the form of royalty for patents developed and registered in India are to be taxed at the rate of 10%. This will also be reported under schedule OS,” said Maheshwari.

In the Finance Act, 2013, a new deduction under section 80EE was introduced, which remained available for 2 years—FY2013-15. Under this section, a first-time homebuyer was allowed to claim a deduction of up to Rs1 lakh in total (for both the years) against interest paid on home loans. This was in addition to the deduction available under section 24(b) of Rs2 lakh. Section 80EE has been reintroduced for the AY2017-18. However, this time, the deduction limit is up to Rs50,000 per year, starting from FY2016-17 and for subsequent years until the loan is repaid. The deduction is allowed only if the value of house is less than Rs50 lakh with a home loan of less than Rs35 lakh, and loan is sanctioned in FY2017.

To claim this “a new column for this deduction has been introduced in the ITR form, under the schedule VI-A,” said Maheshwari. A first time home buyer now gets an annual deduction of Rs2.5 lakh on interest paid.

Mandatory disclosures

There are a few mandatory disclosures that a person needs to make in her tax return.

In order to account for those who have deposited Rs2 lakh or more in a bank account during the demonetisation period, “the tax department has introduced a new column where the person filing tax will have to give details in the ITR of the money deposited as well as details of bank account such as name of bank, IFSC code and account number,” said Soni.

Besides that, “if any assessee has any unexplained income or investments, she has to report such unexplained income in the new ITR forms, and such amount will be taxable at the tax rate of 60% plus surcharge and cess,” said Maheshwari.

Additional information

In the Finance Act, 2016, a new schedule was introduced that required individuals or Hindu Undivided Families (HUFs) having income of more than Rs50 lakh in a year to declare the value of their assets and liabilities. This included information like cost of immovable property, jewellery, vehicles, bank and cash balance. Now, “taxpayers are also required to disclose the address of immovable property and the description of movable assets,” said Maheshwari.

Further, new fields have been inserted in the forms to disclose interests held in the assets of firms, or association of persons as a partner or member, he added.

So, if you are planning to file your tax return, make sure you keep these changes in mind. Also, remember that the “time period for revision of income tax return has been cut to 1 year (from 2 years earlier) from the end of the relevant financial year or before completion of assessment, whichever is earlier,” said Nangia.

Make sure you have all the details needed and do not make any omissions or mistakes while filing your returns.

Source:livemint.com

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