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Pick up the right form to file your tax returns
May, 20th 2010

Our expert offers tips on various tax-related issues in this weekly column.

Vikas Vasal, Executive Director, KPMG

Every individual whose total income before allowing deductions under Chapter VIA of the Income-tax Act, 1961 (the Act), exceeds the maximum amount, which is not chargeable to income tax, is obligated to furnish his return of income.

For FY09-10, these limits are Rs 1.6 lakh for men, Rs 1.9 lakh for women and Rs 2.4 lakh for senior citizens, who are of the age of 65 years or more. Recently, the government has notified the forms which are to be used by the tax payers for filing their tax return.

Saral II (ITR-1)

Any individual having income from salary/pension, income from one house property (excluding cases where loss is brought forward from previous years) and income from other sources (excluding winning from lottery and income from race courses) can file his tax return in the simplified form Saral II.

Further, in case income of any other person, like spouse, minor or child, is to be clubbed with the income of the tax payer and then this return form can be used if the income so clubbed falls under the above categories. Annexure-less return

No document, including TDS certificate issued by the employer (Form 16), are required to be attached with this return form. Also, no computations are to be attached with the said return form.

How the return can be filed

Tax payer may file his tax return in Saral II with the tax authorities in paper form in hard copy, electronically with digital signatures, transmitting the data in the return electronically and thereafter submitting the verification return in Form ITR-5.

Details of transactions, other than income

It is pertinent to note that besides income and taxes, a tax payer is also required to furnish details of certain financial transactions undertaken by him during the financial year.

These, inter alia, include cash deposits of Rs 10 lakh or more in a savings bank account, credit card payment of Rs 2 lakh or more, mutual fund units purchased for Rs 2 lakh or more, bonds or debentures of a company or institution purchased for Rs 5 lakh or more, purchase of shares issued by a company for Rs 1 lakh or more, immovable property purchased or sold for Rs 30 lakh or more, purchase of bonds issued by RBI for Rs 5 lakh or more.

Exempt income also to be disclosed

The tax payer is also required to declare income which he has claimed exempt dividend income, income from long-term capital gains on which Securities Transaction Tax has been paid, etc, in the return form.

Other tax return forms to be used

ITR-2 is to be used by an individual or Hindu Undivided Family (HUF) having income under the head salaries/pensions, house property, capital gains, income from other sources. ITR-3 is to be primarily used by an individual or HUF who is a partner in a firm. ITR-4 is to be used by an individual or HUF who is carrying on a proprietary business or profession.

ITR-5 is to be used by a person being a firm, Association of Person (AOP), body of individuals, artificial judicial person, corporation or society and local authority. ITR-6 is to be primarily used by company.

To sum-up

Most of the individuals having salary income and one house property would primarily be required to file their tax return in the new Saral-II Form (ITR-1), which is to be filed with the tax authorities by July 31, 2010 for the FY09-10 (assessment year 2010-11).

Individuals having salary income and more than one house property would have to file their return in Form ITR-2. Selecting the correct form will help the tax payer minimise his time and effort in preparing and filing his tax return.

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