To start with, all the taxpayers who have earned income above Rs 5 lakh in 2013-14, are required to file their income tax return in the assessment year (AY) 2013-14. The government has made many amendments to the Income Tax Act 1961, in the Budget 2013-14. While filing the return, you have to keep in mind the changes. Then, you have to understand the form that you have to fill. The salaried individuals, who are required to file their returns latest by July 31, have to fill what is known as ITR-1 (though there are certain exceptions to this which have been discussed later). If you fail to file returns within the due date and any taxes are payable by you after considering tax deducted at source (TDS) by your employer, advance taxes or other credits, you will be charged a penal interest at the rate of one per cent per month for the delay in filing the returns.
All the same, salaried individuals earning less than Rs 5 lakh and having saving bank interest income of less than Rs 10,000 in a year need not file their tax return. This too though comes with a rider. The exemption from filing return is available only if the employer has deducted the entire tax liability through TDS and deposited it with the government. If salaried employees have changed jobs during the year, they will not be exempt from filing the tax return even if they fulfill the condition.
All individuals having income above Rs 5 lakh have to mandatorily file I-T returns electronically. ITR-1, known as Sahaj form, has to be filled by individuals who have income from salary or pension, receive income from one house property or have income from sources other than winnings from lottery and race horses. However, if an individual has income by way of interest on, say, public provident fund or any other such government-issued bond or securities, or dividend, leave travel concession among others, which exceeds Rs 5,000, she will have to file ITR-2. Also, if you have a loss brought forward from previous year, you have to file ITR-2.
For the AY 2013-14, those having income up to Rs 2 lakh are exempt from tax payment. Those between Rs 2-5 lakh would have to pay tax at 10 per cent and those above Rs 5 lakh but below Rs 10 lakh have to pay tax at the rate of 20 per cent. Above Rs 10 lakh, the rate is 30 per cent.
For individuals who are above 60 years but below 80 years, income up to Rs 2.50 lakh is exempt from tax while that between Rs 2.50 lakh and Rs 5 lakh is taxable at the rate of 10 per cent. The other two slabs remain the same.
Individuals above the age of eighty years don’t have to pay any tax on income up to Rs 5 lakh while the other two slabs in their case also remain the same as above.
On the other hand, ITR-2 has to be filed by any person who has more than one house, has income from lottery and race horses, income from sale of house or plot or shares (called capital gains), income from agriculture or exempt income in excess of Rs 5,000, or income from business or profession. Further, those individuals who claim loss under the head of income from other sources, or claim relief of foreign tax paid under section 90, 90A or 91 abroad or those who have any asset including financial interest in any entity located outside India, will have to file ITR-2.
The individuals need to file advance tax if their tax liability exceeds Rs 10,000 in a financial year. The advance tax can be paid in three installments – 30 per cent of advance tax by September 15; 60 per cent by December 15; and 100 per cent by March 15. If you miss the installment deadline, you can pay the tax later but with one per cent interest per month of default.
While filing returns, keep details of your permissible investments by your side. They are allowed as deductions under the income tax act, thereby reducing your tax liability. These include amount paid towards life insurance, provident fund, new pension scheme, or a maximum deduction of Rs 25,000 towards Rajiv Gandhi Equity Savings Scheme among others. The total amount allowed as savings is Rs 1 lakh. Further, tuition fees paid for your children, or interest on loan taken for higher education, or interest on deposits in savings account up to Rs 10,000 is allowed for deduction too. In case of house property, a flat deduction of 30 per cent of the amount is permissible for repairs and such construction while interest on housing loan up to Rs 1,50,000 for self occupied house is allowed.
Deduction in respect of medical insurance premium and contribution to CGHS up to Rs 15,000 for self, spouse or children, for parents up to Rs 15,000 and for severe disability up to Rs 1 lakh is allowed. Donations to certain funds and charitable institutions are also allowed.
While the individuals have to be careful while filling their PAN detail, there are several other points one needs to remember before submitting the ITR-1 or ITR-2 to the department.
1. If you have more than one house and the other house is lying vacant, don’t forget to add the notional rent of the vacant house in the total taxable income.
2. Income from fixed deposit or savings bank account is taxable.
3. Any investment in name of your wife, husband, or minor child will be clubbed with your taxable income and will be taxed under section 64 of the income tax act. However, such income is exempt up to Rs 1,500 each for two children.
4. If you have received gift in cash of more than Rs 50,000 from someone who is not your relative or spouse, you have to include that in your total taxable income under section 56 of the Act. Similarly, if you received any immovable property as a gift, the stamp duty value of which exceeds Rs 50,000, you have to include that too.
5. Income from short-term capital gains like sale of shares or an equity-oriented mutual fund should be filled in the form. It is taxable as per section 111A at a flat rate of 10 per cent. However, if it is sale of any other asset it is taxed at the normal slab.
6. Though long-term capital gains are not taxable, they have to be mentioned in ‘other assets’ under section 112(1). This includes consideration received for assets sold such as house property.
7. Winnings from lottery also need to be mentioned in the return.
8. Bank account number and MICR code has to be mentioned in the form. In case you fill either of these wrong, you would need to submit a cancelled cheque showing the corrections. You may also log on to the website and make a refund re-issue request under ‘My Account’.
However, your job is not complete, whether you are filing return online or a paper return. After filing, you have to send to Bangalore-based central processing centre, what is called, an ITR-V by ordinary post or speed post.
Once the central processing centre receives it, an electronic acknowledgement to the tax return filer is sent or an acknowledgement receipt is sent in case of paper return.
All about e-filing
What is e-payment of taxes?
E-payment of taxes is a facility provided to the taxpayers to make income tax payments through internet, using net-banking facility.
How can I use this facility to pay income tax?
You can use the facility if —
a) You have a bank account with net-banking facility, and
b) Your bank is amongst the banks that provide the e- payment facility.
it is mandatory to pay tax online?
It is mandatory for the following types of assesses to pay tax online with effect from April 1,2008.
a) All the corporate assesses.
b) All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.
What if your bank does not have an online payment facility?
In case your bank does not have an online payment facility or is not an authorized bank then you can make electronic payment of tax from the account of any other person who has an account with the authorized bank having online facility. However, the challan for making such payment must clearly indicate your PAN.
What after I confirm the payment of tax at my bank’s site?
Your bank will process the transaction online by debiting the bank account indicated by you and generate a printable acknowledgment indicating the Challan Identification Number (CIN). You can verify the status of the challan in the “Challan Status Inquiry” at NSDL-TIN website using CIN after a week.
Do I have to attach the acknowledgment with my return?
No, it will be considered sufficient proof if you quote your Challan Identification Number (CIN) as mentioned in your counterfoil in your return.
How secure is e-payment?
All transmission through NSDL-TIN website is encrypted and is with Secure Socket Layer (SSL) authentication. With respect to the banks, it depends on the security measures provided by the bank for net-banking.