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Several changes have been made in the tax filing rules since last year. Find out what these mean for you
This is just one of the several changes in the tax filing rules this year. The new forms are a wake-up call for taxpayers who have not been entirely honest in paying their taxes. Nearly 5% of the respondents in an online survey conducted by ET Wealth recently said that they have under-reported their income quite a few times. Another 10% said they have done so just once or twice. We believe there is also a large community of innocent offenders who don't even know that they are falling foul of the tax laws. To ensure that your tax returns are flawless and you don't end up on the wrong side of the law, ET Wealth reached out to experts to understand the changes in this year's tax forms. Here is what they had to say.
E-filing for income over 10 lakh
Any individual or Hindu Undivided Family (HUF) with an annual income of 10 lakh and above will now have to compulsorily e-file the income tax return. The new rule actually affects a thin creamy layer of taxpayers. Only 5.5% of the total 4.2 crore taxpayers have an income of over 10 lakh, and a vast majority of these taxpayers has already taken the e-filing route.
The government wants to nudge taxpayers to e-file because it improves tax compliance and reduces its own back-office workload. When returns are filed physically, data entry operators manually feed the information into the system. In the process, they introduce many mistakes in the return, which leads to delays in refunds or, worse, a notice from the tax department.
Declaration of foreign assets
The assets covered include bank accounts, immovable property and interest in any company. The taxpayer will have to mention the peak bank balance in his account during the year as well as the total investment in other assets at cost price.
By introducing this change, the government intends to track the undisclosed income from these assets.
Details of tax relief claimed
If the assessee has claimed relief for taxes paid abroad, he will have to mention details in his return. He will have to mention the name and code of the country visited, income earned, taxes paid, and the tax identification number in the foreign country.
Ownership pattern of property
The new reporting requirements have also plugged a big loophole in the way income from property is reported. Till now, a taxpayer had to just mention the property and the income received as rent. Now he will have to disclose the ownership details in the tax return. If the property is jointly owned, the percentage share in the property and the details of the co-owner need to be mentioned. "This also means that the rental income will have to be proportionately divided among the joint owners," says Ankur Sharma, co-founder and managing director of Taxspanner.com.
Deduction for donations
Taxpayers who want to claim tax deduction for donations given to organisations must provide full details of the recipient. They must give the name and address of the organisation, its PAN, amount of donation and the amount eligible for deduction.
Bank details now mandatory
In the new forms, you have to mention your bank account details even if there is no refund. Despite the changes, the basic rules remain the same. If you have some unpaid tax, pay it right away before you file your return. File by the due date to escape penalty. If you miss the 31 July deadline, you can always file by the end of the assessment year. You will, of course, forego some privileges enjoyed by taxpayers who file their returns by due date. For instance, you will not be allowed to carry forward short-term and long-term capital losses (except from house property). This provision can be very helpful, especially if you have lost money in stocks.
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