Things to keep in mind while filing income tax return this year
Every year, the Income Tax Department makes changes to the tax-filing procedure and tax forms. This time they even changed the Income Tax Portal. It is critical for a taxpayer to be aware of these developments in order to complete a Income tax return process free of errors.
The ITR forms for AY21-22 have been released, and the ITR filing date has been extended till September 30. However, it is preferable to begin tax preparation now and file the ITR as soon as feasible. It will not only speed up the processing of tax returns, but it will also lower your possibilities of making mistakes. However, there are a few things to keep in mind before you get started.
New vs old tax regime
Budget 2020 saw the introduction of a new optional tax structure by the government. Individual taxpayers will be able to select between two tax systems starting in FY21. The new regime offers a lower slab rate of taxation, but the taxpayer will have to forego a number of deductions and exemptions that were previously accessible. It is normally recommended that the taxpayer select the regime at the start of the year. If you were unable to make the planned investments or expenses for which you could claim a tax deduction under the previous regime, you can move to the new one if it results in a lower tax burden for you.
This is more important for business owners. “Business owners should select the correct regime thoughtfully because once selected, it can be changed only once. However, salaried individuals with income from salary, house property and other income can change it every year. One should calculate tax under both regimes after considering applicable provisions and then decide,” said by one expert.
Read Also : Income Tax Return: E- verify ITR through 6 ways
Extension of dates, no tax relief
The deadline for filing an ITR has been extended until September 30th. It does not, however, afford any relief from the tax obligation. If you owe tax in advance, you may be required to pay penalty interest. As a result, it is preferable to pay the tax as soon as possible and file the ITR.
“The CBDT has provided that relaxation with respect to interest under Section 234A only where the self-assessment tax liability (after providing for TDS, advance tax, etc.) does not exceed ₹1 lakh. Thus, except where the self-assessment tax liability exceeds ₹1 lakh, no relief with respect to Section 234A would be provided to the taxpayer assessee,” said by one expert.
For any delay in filing the ITR, interest at the rate of 1% is imposed monthly under Section 234A. “Further, the taxpayer assessee may be subjected to interest under Section 234B and 234C irrespective of the extension of the due date,” he added.
If the taxpayer has not deposited advance tax or if the advance tax deposited is less than 90% of the total tax burden, interest is due under Section 234B.
If the taxpayer does not pay advance tax in the appropriate quarterly instalments, he or she would be subject to penalty interest under Section 234C.
Senior citizens without business income are not required to pay advance tax.
Changes in tax forms
Every year, after incorporating any modifications, the tax agency is required to notify tax forms. It is critical to understand the modifications in order to select the appropriate ITR form. This year, the eligibility conditions for ITR 1, which is commonly used by salaried taxpayers, have been updated. This year, anyone who has had tax deducted at source (TDS) deducted for a cash withdrawal under Section 194N, or employees who have deferred tax on employee stock options (ESOPs) received from their employer, cannot submit ITR 1. As a result, select the form with these changes in mind.
There’s no need to be concerned if you failed to submit documentation of investments such as life insurance or health insurance premiums to your employer and tax has already been deducted. You can claim these deductions when filing your ITR and receive a refund of the tax you paid. Keep a copy, however.
This year, you’re likely to receive a lot of pre-filled information, such as interest earned, dividends received, and capital gains on stocks and mutual funds. It’s critical that you double-check these details against the documentation you have. As a result, it’s a good idea to gather documentation like Form 16, Form 26AS, and bank statements before you begin completing your ITR.
“Assesses are advised to wait till 15 July as all the TDS deducted or TCS (tax collected at source) paid on their behalf may get updated in their Form 26AS by that date. The deadline for filing TDS and TCS returns has been extended till 30 June,” said by one expert.
The ITR must be verified before the tax return can be filed. It must be completed within 120 days of the ITR being filed. It can be done either online or by mailing the legally signed ITR-V through the mail.
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