As we are all aware that the CDBT has vide notification dated 15-05-2007 issued a new set of Forms to be filled in for the Assessment Year 2007-08 and it is effective from 15-05-2007.
Following is a small and simple guide to filling the forms.
Documents to keep ready
Which ITR Form is applicable to you?
With the introduction of new income tax return forms based on nature of income earned during the year, one needs to know relevance of each return form and select the right form.For an individual, four forms have been introduced, the details of which are as under:
ITR – 1
Meant for Individuals, who have
a) Income from salary
b) Interest income (taxable / exempt)
c) Family pension
d) Income from agricultural activities
In other words, this form is not applicable in the following situations:
a) Individual having any income (taxable / exempt) other than mentioned above
b) Any brought forward loss of earlier years
c) Any income of other person to be included
d) Any person having Income / Loss from House Property
ITR – 2
Individuals / HUF not having any income on account of carrying out business / profession or on account of being a partner in a partnership firm. It includes individuals who have only Salary Income but want to claim Interest on Housing Loans
ITR – 3
Individuals / HUF who are partners in a partnership firm and does not carry out any other separate business / profession. In other words Individuals / HUFs who are Partners in a firm but who do not carry out any independent business of their own.
ITR – 4
Individuals / HUF who is carrying out business / profession under a proprietary concern.
ITR – 5
Firms / AOP / BOI (other than Trusts claiming exemption u/s 11) and this includes the Fringe Benefit Tax Return.
ITR – 6
Companies (other than Companies claiming exemption u/s 11) and this includes the Fringe Benefit Tax Return.
ITR – 7
Trusts and Companies claiming exemption u/s 11 and this includes the Fringe Benefit Tax Return.
ITR – 8
Return of Fringe Benefits
Acknowledgment Non E-filing
Acknowledgmentto be filled in case of filing in Physical Form
ITR – V
Acknowledgmentto be filled in case of Electronic filing without a Digital Signature
Last date for filing tax returns
The last date for filing return of income for the year ended March 31, 2007 for Individuals, Firms, Trusts, AOP, BOI, Co-operative Societies and Local Bodies (Other than those who are required to get their accounts audited) is July 31, 2007 and for Companies and others, it is October 31, 2007.
Consequences for not filing tax return by the last date
If individuals file their returns after the last date mentioned above, they will be charged a penal interest at the rate of 1% per month of delay on the taxes, if any remaining unpaid. However, if such a return is filed after March 31, 2008, apart from the penal interest, they will also be liable for a penalty of Rs 5,000.
How to file the tax return
Today there are two options available to the individuals to file their return of income:
a) Electronic filing;
b) Physical filing
It is mandatory for Companies and Firms who are required to get their accounts audited under the Income Tax Act, 1961 to file their returns through Electronic Filing only.
As a temporary relief to firms, The CBDT has temporarily allowed them to file returns in Physical Format, till the Software is ready and subsequently they have to again file the Returns in Electronic Form.
The CBDT has initiated the Process of getting the Softwares for filing Returns Online ready and they are expected to be ready by ( I dont know when they will be available).
Under Electronic filing, the individual will have to follow the following procedure:
Get the tax return in a valid XML format (through the Income Tax department site or other online tax preparation sites)
Visit the Income Tax site http://www.incometaxindiaefiling.gov.in/
Log on using the user-ID and password (user name is usually the 10 digit PAN No.)
Select the respective ITR form
Upload the XML file generated
Upon uploading, an acknowledgment will be generated.
If the file is uploaded with a digital signature, then the process of filing return is completed.
However if the file is uploaded without a digital signature, the individual will have to print form ITR-V and submit the same to the Income Tax department physically. The process of filing return will be completed only on physical filing of ITR-V.
For Physical filing, the individual will have to take a print out of the respective ITR form along with the Acknowledgment form and file it with the Income Tax Officer.
Whether it is electronic filing or physical filing, under the new procedure, individuals do not have to attach any documents or enclosures with the return of income, except a Report on Transfer Pricing, which needs to be attached along with the acknowledgment.
Kindly go through the Instructions thoroughly before filing the forms and fill out the proper codes wherever applicable.
Fill in all the columns and in case some column is not applicable just mention N A or Nil.
It thus becomes very important to scrutinize the forms properly before submitting, so that one can ensure that no part of the form is left unfilled or not properly filled, which may lead to several consequences under the Income Tax Act, 1961.
In case of Individuals and HUF it is also important to fill in the details of transactions reported through Annual Information Report (If any) like
- Cash deposits aggregating to ten lakh rupees or more in a year in any savings account maintained in a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applied (including any bank or banking institution referred to in section 51 of that Act)
- Payment made against bills raised in respect of a credit card aggregating to two lakh rupees or more in a year.
- Payment made of an amount of two lakh rupees or more for purchase of units of Mutual Fund.
- Payment made of an amount of five lakh rupees or more for acquiring bonds or debentures issued by a company or institution.
- Payment made of an amount of one lakh rupees or more for acquiring shares issued by a company.
- Purchase of any immovable property valued at thirty lakh rupees or more.
- Sale of any immovable property valued at thirty lakh rupees or more.
- Payment made of an amount of five lakh rupees or more in a year for investment in bonds issued by Reserve Bank of India.
Documents to preserve
Since the tax-payer is not required to submit any additional documents along with the return of income, the documents may be called at the later stage by the Income Tax Officer to check the correctness of the claim made. Hence, it is advised that the individual preserve all the documents required to substantiate the return of income filed. Some of the documents are enumerated below:
- Detailed calculation of taxable income and amount of tax payable / refundable.
- Balance Sheet and Profit and Loss (If any prepared)
- All Audited Accounts
- Audit Reports
- Tax Audit Reports
- MAT report under section 115JB
Form No. 16 / 16A (original).
- Counterfoil of all the tax payments made during the year.
- FBT Challans.
- Computation of FBT
- Computation of Depreciation under Income Tax Act, 1961
- Copy of documents concerning sale of investments and properties.
- Copy of bank statements.
- Copy of proof for all the deductions and exemptions claimed in the return of income (viz. PPF Challans, LIC Premium Receipts, Mediclaim Receipts to name a few)
Common mistakes people make while filing tax returns
The most common notion among salaried employees is that since tax has already been deducted from their salary, there is no need to file their income tax returns. This is not at all true or legal. Even though tax has been deducted and there is no further liability to pay tax, an employee has to compulsorily file his / her income tax return. Form No. 16 received from employer is not their income tax return.
Employees do not include the interest that they receive on their savings bank account. The entire interest earned on your savings bank account is taxable.
Omission of income received by a minor child. A minor child is not required to file a separate return of income. However, this income has to be included in the hands of either of the parents, although it might be a small amount of bank interest.