Clueless on which form to fill for returns? I-Ts Saral

Confused about rules relating to filing of tax returns? KPMGs Vikas Vasal explains the basic provisions

Every individual whose total income exceeds the maximum amount not chargeable to income tax is required to file a return of income with the tax authorities.

Forms for income return

Different forms have been specified for individuals in respect of different sources of income. An individual whose total income includes profits and gains of business or profession can use Form 2. An individual whose total income does not include profits and gains of business or profession may file his return in Form 3.

An individual whose salary income does not exceed Rs 1,50,000 and who does not have any income from business or profession, capital gains or agricultural income and is not in receipt of income on which tax has been deducted by any person other than his employer, may choose to file his return of income in Form 16AA. The return under Form 16AA is to be filed through the employer, i.e., in this case the employee submits his return with his employer who in turn files the return with the tax authorities.

A resident individual who does not have income from business or profession or agricultural income or capital gains (except long term capital gains from transaction on which securities transaction tax is paid) or who does not own more than one house property, etc. may choose to file his return of income in Form 2F. Form 2F invited lot of attention recently as it requires the tax payer to furnish details of cash flow statement.

Saral form

Alternatively, individuals have an option to file the return in Form 2D, also known as Saral, in lieu of Form 2, Form 3, Form 2F and Form 16AA. Saral has been popular amongst the individual tax payers, mainly because of ease of understanding and it being a summary form compared to other available options, namely Form 2, Form 2F, Form 3, etc. It is advisable that a statement of computation of income and calculation of tax is prepared and filed along with the Saral Form.

Due date of return filing

An individual is required to file his return of income by July 31 of the relevant assessment year. For example, for the financial year 2006-07, the relevant assessment year is 2007-08. The return, in this instance, is to be filed by 31 July, 2007.

In case of an individual whose accounts are to be audited under any law, the return can be filed by October 31 of the relevant assessment year. Similarly, in case of a working partner of a firm, whose accounts are to be audited under any law, the return can be filed by October 31 of the relevant assessment year.

Revised return

If an individual, after filing his return discovers any omission or any wrong statement therein, he may file a revised return within one year of the end of the relevant assessment year or before the completion of the assessment, which ever is earlier.

Belated return

If an individual has not filed his return of income with the tax authorities within the specified time period, then he may file a belated return at any time before the end of one year from the end of relevant assessment year or completion of assessment, which ever is earlier.

For example, if an individual, who has only salary income, has not filed his return of income for the financial year 2005-06 (assessment year 2006-07) by July 31, 2006 and if no assessment proceedings are going on, he may file a belated return by March 31, 2008.

Interest charged

If the tax return is not filed by the due date, then interest is levied on the balance tax payable @ 1% per month.

Penalty for non-filing

If an individual does not file his return of income before the end of the relevant assessment year then a penalty of Rs 5,000 may also be levied by the tax authorities.

Signed by individual

The personal tax return has to be signed by the individual himself. If the individual is absent from India or, for any other reason, it is not possible for the individual to sign the return himself, then the return may be signed by the person duly authorised by such individual. In such a case, the power of attorney authorising such person to sign the return on behalf of the individual is also to be attached along with the tax return.

Electronic filing of return

An individual has the option of filing the return either manually or electronically. Currently e-filing has been made compulsory for companies and not for individuals.

Few important points

An individual should take due care while preparing and filing his income-tax return. The tax return should be signed by the individual; all columns of the return should be duly filed in. In case of Form 2D Saral, a computation of income and tax calculation, along with Form 16 (certificate of tax deducted at source on salary by the employer), Form 12BA (Certificate for tax deducted on perquisites), self assess-ment tax challan, etc. should be enclosed with the return.

Finally ...

The income-tax return filing is not only an obligation but it is also an important and useful document for various purposes like obtaining housing loans, auto loans from banks, applying for visas for personal visits overseas, etc. Therefore, due care should be taken in the preparation and filing of return by the individual. Also, necessary supporting document should be maintained to substantiate the claim in respect of the income, deductions, etc. in case the return is picked up for assessment by the tax authorities at a later date.