Its that time of the year again when all your income for the current financial year is in and you need to file your income tax returns. By now, you, the salaried lot, might have received your Form No 16 (salary income) and Form No 16A (tax deducted on other income). And, if you belong to the category of individuals involved in business and other professions, you too might have completed the adjustments and finalisation of yearly accounts.
With July 31 just a few days away, moneycontrol.com brings to you the easiest and simplest guidebook on filing your tax returns avoiding numerous hassles.
But, why is it important?
There is a misconception among some salaried individuals that because the employer has deduced tax at source, they are not required to file tax returns. Even though tax has been deduced and there is no other source of income, or liability to pay tax, you have to file income tax returns. It is necessary to file income-tax returns if the total income, before allowing any deduction, exceeds the exemption limit.
Even if your income is below the exemption limit, which is bound to happen at the beginning of ones career, filing income tax returns will help in the documentation process if you are taking a loan or an insurance policy or when you are applying for a visa.
What documents are required?
All you need is Form 16 and 16A along with the summary of all your bank accounts. And of course your PAN Card number.
Which form to choose?
There are eight Indian Income Tax Return (ITR) forms. Depending on the various streams of income you earn, you have to select the return form accordingly. E.g. If you have income from salary, pension and interest income, then ITR-1 is the form for you. If you have capital gains or rental income or youre paying off a home loan in addition to interest income and salary income, then you need to fill ITR-2. Make sure you select an appropriate form after taking into consideration, the flow of income from various streams.
How to file your returns?
There are two possible ways to file your returnsonline and offline.
Though many are contemplating whether its worthwhile shifting from the old fashioned method of filing returns physically to a modern method i.e. e-filing which was introduced in the assessment year 2006-07, but the fact remains that with the last day for filing Income Tax returns coming close, whatever means you chooseoffline or online, what matters is that it is done before its too late.
What is E-Filing of returns?
It means filing your Income tax returns electronically through the internet. Its a simple, easy and convenient process.
You can log on to www.incometaxindia.gov.in and file returns for free. However the process involved is complicated, which might be confusing for a lay man as it includes downloading of an XML file.
To save you of this complication, many websites like www.myitreturn.com, www.taxspanner.com and www.taxsmile.com, today offer easier online tax filing services which do not involve any downloads, but they do charge you a minimal amount varying from Rs 250-300.
In an offline mode, you can go to your Chartered Accountant and submit all required documents, paying a consultation fee, which could go up to as high as Rs 2500, varying from CA to CA.
However, the online mode is said to be a faster, quicker and easier way to file your returns.
The return form, along with copies of necessary supporting documents, has to be filed at the appropriate income tax office or special counters set up for this purpose by Income Tax Department of India.