As the deadline to file income tax return (ITR) for FY 2017-18 is approaching so are the last minute jitters for many. The last day for filing ITR is July 31, 2018, and you must not miss the deadline at any cost. Filing returns on time is proof of tax compliance and financial prudence.
Whether you are filing ITR for AY 2018-19 for the first time or are unsure about the taxation amendments for FY2017-18, here is a quick guide on what you need to know as a salaried employee.While you do not have enough time left to draft strategies to save more tax but you can still take some necessary steps to claim the deductions. While filing the return, you would however need to keep all proofs handy.
It might sound like a cliché but many salaried employees believe that they are the most burdened lot, which is clearly a mental trap. The amendments have been introduced to make the systems more transparent and user friendly.
Some of the notable changes introduced under the Finance Act, 2018, include reintroduction of standard deduction, elimination of allowances (medical and HRA), long-term capital gains (LTCG) tax on equity, and increased income tax cess.
The game is easier and swifter this year.
More than 70 per cent of income taxpayers, who declared income above Rs 5 lakh in the FY 2015-16 were salaried employees. And if you look closely, things have become far transparent with the introduction of online ITR Form-1 or Sahaj. There are no reasons to feel intimidated by the amendments.
The simplified e-version of the taxation form is not only swifter to file but also helps the tax department to keep a strict vigil on those who under report or over report their incomes and expenditures to evade the tax net.
Here's a handy list of documents required for filing ITR:
1) Permanent Account Number or PAN card
2) Aadhaar card
3) All bank statements
4) Form 16 issued by your employer
5) Copy of your last year's ITR
6) Proof of investments for deductions under Section 80 C:
Section 80 C allows the taxpayer to save up to Rs 1.5 lakh in the financial year. It is certainly one of the major parts of tax planning and saving income tax.
You can claim following investments under section 80 C:
1) Premium paid for Life insurance
2) ELSS or Mutual Fund investments
3) Contributions towards Provident Fund
4) Premiums paid for retirement
5) Tuition fees for children
6) Principal for home loan
7) National Savings Certificate bonds
8) Bank FD or similar deposits
9) Amount paid to National Pension System or other similar account
1) Excess house rent paid over the HRA. (Only when the assessee doesn't own a house)
2) Deduction for higher education loans
3) Medical insurance premiums for self, family, or parents
4) Saving account Interest up to Rs 10,000
5) Interest paid on home loan
6) Donation to Prime Minister's Relief Fund
7) Income from patents and royalties
This is an indicative list of documents that will help you claim deductions and save tax. You would need to get the original copies scanned to file the ITR online.
Steps to follow
After gathering all documents, follow the step by step process shared below:
1) Register/ login on http://incometaxindiaefiling.gov website. Your PAN will be your user ID.
2) Upload form 16. You can check your tax credit statement on Form 26AS and know about taxes being deducted by your employer. TDS as per Form 16 must tally with the details noted on Form 26AS.
3) You can click "Download" tab and choose AY 2018-19 (for financial year 2017-18) and download ITR form required.
4) Now you can claim deductions if any.
5) Calculate tax payables and pay taxes.
6) Do not forget to re-check the personal details.
7) Now click submit. Note down acknowledgement number.
8) If your PAN is linked to the Aadhaar number your ITR would be digitally signed or you would need to send ITR-V signed to CPC.
9) You can track status of previous refund by providing PAN number and assessment year.
Whether you decide to file the ITR yourself or use a CA's assistance, make sure you complete the process well in time. You (if income is above Rs 5 lakh) could be subjected to a penalty of Rs 5,000 if you file the return after the due date but before December 31, 2018. Post December 31, the penalty would be Rs 10,000.
New habits to adopt: To ensure ease of filing ITR this year, next year and every year
1) Always keep your documents ready. While this might sound as a basic advice, it indeed is one of the first steps to ease your filing procedure. In most cases, missing document(s) is the only reason for unprecedented delays. Always keep a file of your documents as discussed in the list above besides your old tax receipts.
2) Evaluate the numbers before filing. It is always good to evaluate and do re-checks before final submission as it will save you from last-minute surprises. You can also consider using online filing software for the purpose.
3) Disclose all sources of income. While filing ITR disclose all sources of income. You should not skip the information. Hiding income information can become a major hassle later.
4) Verify ITR and claim Section 80 deductions. After you e-file your return, you need to e-verify ITR-V using Aadhaar, netbanking, or by way of electronic verification. Last but not the least, under section 80C claim the deductions offered.