NEVER ask a man his wage and a woman her age is an adage often quoted but not one that your taxman upholds. Yet again, it’s that time of the year when you are required to disclose the details of your income and file income-tax returns. To make this pocket-pinching process a non-taxing job, we list down six steps which you can follow to sail through.
DO YOU NEED TO PAY TAX?
This year, the income-tax department has made revisions with regard to tax slabs and exemptions. The income slabs for different categories have been revised this year, so verify if you need to pay tax at all. You are not required to file tax returns if you are a man whose earnings were less than Rs 1.1 lakh in 2007-08. On the other hand, in case of a woman, an income of less than Rs 1.45 lakh during the previous financial year is exempt from filing tax returns. Similarly, senior citizens whose income was below Rs 1.95 lakh in 2007-08 is also free from this obligation.
GET YOUR FACTS RIGHT
Once you’ve ascertained that you have to pay tax, you need to choose from the forms titled ITR 1 to ITR8. ITR 1, ITR 2 and ITR 4 are the forms most commonly used by an individual and an HUF.
ITR 1 - ITR 1 is the form that you must pick up if your income is from salary, pension or interest income.
- ITR 2 - ITR 2 caters to individuals who have an income apart from salary (from property or capital gains) but not from a business or profession.
- ITR 3 - An individual who is a partner in a partnership firm is supposed to fill up ITR 3.
- ITR 4 - An individual who makes an income from his business or profession, including investments in the stock market, should fill ITR 4.
To fill your form with ease, you must get your documents together with necessary details. This includes documents such as:
- Form 16 (which is given by the employer and includes details about yearly income) and
- Form 16(A) with details of tax deducted at source on income other than the salary.
In addition, chartered accountants advise that you should have a copy of the returns filed the previous year, bank statements with details of accounts operated not only by you but also by your spouse (provided she does not have an income of her own) and children who are minors.
Besides, you need to have your savings statements and an interest statement that reflects how much was your interest income in the previous year. Remember, these documents are for your reference while filing tax returns and none of these documents needs to be attached with the form.
MAKE YOUR DISCLOSURES
You are also obliged to make disclosures in the following cases: If you have invested more than Rs 2 lakh in mutual funds, withdrawn over Rs 10 lakh in cash from your savings account or if you have purchased bonds worth more than Rs 5 lakh. You also need to furnish details of your immovable property if they exceed Rs 30 lakh, to disclose the acquisition of shares beyond Rs 1 lakh and an aggregate payment of Rs 2 lakh or more via a credit card.
BE AWARE OF DEDUCTIONS
To avail of the legal deductions, financial planners advise that you should acquaint yourself with the terms of section 80 of the Income-tax Act 1961. Tax breaks are available on both incomes and payments. For instance, you are eligible for a deduction for the premium paid towards your life insurance policy, or if you have contributed to funds such as the provident fund set up by the government, or for that matter, deployed funds in the pension scheme set up by the Central government or a superannuation fund. The deduction on medical insurance premium and on medical treatment are beneficial for the elderly. There is, however, an upper limit to the deductions possible.
FILING AND SUBMITTING THE FORM
For your own benefit, the form should be filled accurately, if possible without any overwriting. You should re-check details, particularly where you quote your Permanent Account Number (PAN) and Transaction Authentic Number (TAN). The forms can be filled and submitted on paper at the income-tax office or at specified post offices or digitally (it is, however, mandatory to have a digital signature) or as a combination of both, in which case there are more procedures for verification involved.
You should try to follow, as much as possible, the calculation methods which are described in the form itself. Also, remember to get an acknowledgement slip in every case. The final date for filing tax returns is July 31. If you don’t want to file the returns on your own, you can hire the services of a government-trained tax return preparer or a chartered accountant. If you delay filing your tax returns beyond July 31, an interest of 1% per month will be charged.
