It is that time of the year again to file your income tax returns. Salaried individuals are especially anxious about it. While many companies conduct camps to take care of their employees, it is useful that we understand the process and requirements.
You are legally obligated to file for your returns only if your taxable income exceeds the basic exemption limit (For the financial year ending March 2008 : Male assessee Rs. 0.11 million; female Rs. 0.15 million; senior citizen Rs. 0.19 million). The last date for filing taxes for individuals not subject to tax audit is Jul. 31.
Prepare for Tax Filing
First step towards tax filing is keeping the relevant documents ready and in place. Preparing a checklist of what would be required and segregating various documents from different sources is pertinent. Some of the common documents applicable are 1. Form 16 (from each employer) 2. Form No. 16A (Incase of term deposits, consultancy income) 3. Summary of all bank statements 4. Details of capital gains, rental income (if applicable) 5. Business persons would require consolidating their accounts and drawing up the P&L.
Multiple Form 16s
If you have worked with more than one employer during the same FY, you are required to collect Form 16s from all the employers. You need to consolidate all sources of income such as bank interest and capital gains while filing your returns. You are likely to have a tax payable; this is because you would have got the basic exemption limit and lower tax slabs at both places.
Ideally get the full years` tax computation from all the employers and calculate the tax payable during the FY. This would help avoid the penal interest of 1% p.m which will kick-in right from the advance tax dates and March.
If one fails to submit proofs when the company calls for the same, this can be taken care of while filing your return. One can claim a refund by re-computing the tax liability and attaching the relevant proofs. This is applicable for both exemptions and deductions, but not for reimbursements. There is no separate process to claim refunds. If the IT returns show a ``Refund Due`` in the computation, then the income tax department would automatically process the refund.
If one has income only from salary/ pension/ family pension and bank interest then one can use the ITR1 form. In addition to above incomes, if you have rental income, capital gains and income from other sources, then file ITR2. If there are business income or consultancy fees, then one needs to use ITR 4.
Document post-tax filing also requires to be saved appropriately these documents may be called at the later stage by the income tax officer for scrutiny, some of the documents which needs to be preserved are
Detailed calculation of taxable income and amount of tax payable / refundable Advance tax / self assessment tax challan Copy of documents concerning sale of investments & properties, bank statements etc., Acknowledgement of income tax returns
Most importantly, to avoid the last minute chaos, file your returns at the earliest Wishing all a smooth, worry-free tax filing this year!
Anil Rego is the founder and CEO of Right Horizons, an Investment Advisory and Wealth Management Company. Right Horizons has successfully practiced a de-risked model with a Contrarian approach.