Article compiles 25 Important Points to be Considered  before Filing of Income Tax Return for Financial Year 2017-18 / Assessment Year 2018-19.

1. Use Correct ITR Form

ITR 1

  • For Individuals having
  • Salary Income
  • Pension
  • Income from Other sources
  • Income from House property (only One House )
  • Agriculture Income less than Rs. 5000
  • Total Income is up to Rs. 50 lakh

ITR 2

  • For Individuals and HUF having
  • Income from items in ITR 1 which is more than Rs. 50 lakh.
  • Income from capital gains
  • Foreign Income
  • Agricultural Income more thanRs. 5000
  • Income from Business or Profession under a Partnership firm

2. Consequences  Of  Not Filing Of  ITR In Time

(Last Date to Submit ITR is 31st July)

1. Notice may be issued u/s 142(1) for non-filing of income tax return.

2. Losses if any during the year, would not be allowed to carry forward. Normally, if you file your return on time, losses of this year can be set-off against gain of forthcoming years.

3. Interest at the rate of 1% per month would be charged on outstanding amount of Tax .

4. Penalty  ( Next PPT )

5. Return Filed in time or Belated ITR  can be revised before the end of Relevant Assessment Year or completion of assessment which ever is earlier.

2a. Penalty for Not Filing of ITR in Time

Section  234F w.e.f. FY 2017-18 to provide  mandatory late fee for default in furnishing the  ITR  before specified date.  

Due Dates of filing return of Income for Individual :

It is 31st July of the assessment year (i.e. 31st Jul 2018 for FY 2017-18).

Resident Individual liable to pay late fees

If total income exceeds the maximum amount  not chargeable to  tax does not file ITR, is liable to pay late fees.

Income Exemption Limit which is not chargeable to tax

Rs 2.50  Lacs  for Individual , Rs 3 Lacs Sr. Citizen , Rs 5 lacs Super Sr citizen . The above income limit is before deductions under chapter VIA (i.e. 80C to 80U)

LATE FEES TOTAL INCOME
Nil If Total Income* is below taxable limit.

*Total Income means Gross Total Income Minus Deduction under Chapter VIA (i.e. 80 C to 80U).

Rs. 1,000 If total income is below Rs. 5,00,000/-
Rs. 5,000 If total income exceeds Rs.5,00,000/- and return is furnished up to 31st December 2018 (For the FY 2017-18)
Rs. 10,000 If total income exceeds Rs. 500000/- and return is furnished after 31st of December 2018 (For the FY 2017-18) and non-filing of return.

3a. Proper Disclosure of Interest Income

> Interest on SB, RD, FDR, NSC, Infrastructure Bond

> No TDS on Savings account but on time deposit (RD & FDR) it is applicable

> Deduction u/s 80 TTA Rs 10000 in respect of savings bank account available

> FDR interest in ITR necessary as TDS is only 10%  but assessee may be taxable @ 30%

> Matching with 26 AS

> Submit 15G/15H in time if  ITR not to be filed.

3b.Taxability of Various Types of Interest

Sl Nature of Interest Taxability Remarks
1. Bank  Fixed Deposit Interest yes
2. Bank Saving Bank interest Yes Deduction u/s 80TTA available
3. Bank R.D.  Interest Yes
4. 5 Year Tax Saver FDR Yes
5. PO saving Bank Yes Deduction u/s 80TTA available
6. PO RD A/C and FDR Yes
6. KVP Yes
7. NSC Yes Deduction u/s 80C available
8. PF/PPF No
9. Corporate FDR Yes
10. Foreign Gold Bond Yes
11. Capital Gain Bond Yes

4. Clubbing of Income (Minor & Spouse)

> Earning from investment in the name of minor child or spouse to be clubbed in donor income

> Minor child means less than 18 years

> A deduction of Rs 1500 per children

> No clubbing if spouse in professional capacity

5.When Filing of ITR Not Required ?

(When GTI after exemption is less below taxable limit ) 

Details Taxpayer A  Taxpayer B Taxpayer C
GTI 300000 400000 800000
Less :Exemption  ( HRA, LTC Conveyance ) 20000 160000 200000
Less :Deduction  (80 c & 80TTA ) 40000 70000 150000
Net taxable income 240000 170000 450000
Whether  filing of ITR  Required ? Yes No Yes
Tax payable Nil Nil 23175
Reason  for  Filing/non filing Even though the taxable income is less than 250000 but  before  deduction  exceeds  250000 GTI after exemption  is  less than 250000 Taxable Income before deduction  is more than 250000

6. High Value Transaction ( U/S 285 BA)

Sl. Nature and value of transaction Report by Whom
1. a) Payment in cash for purchase of DD/PO/Banker’s Cheque aggregating to Rs. 10 Lakh or more

b) Cash deposits/withdrawals aggregating to Rs. 50 Lakh or more, in or from one or more current account.

A bank/co-operative bank
2. Cash deposits in SB aggregating to  Rs. 10 lakh or more in a year A bank/co-operative bank/ post Master General
3. Time deposits aggregating to Rs. 10 lakh or more in a financial year( other than time deposit issued on renewal of a/c ) A bank/co-operative bank/ post Master General/ Nidhi/ Non-banking Co.
4. Credit Card Payment made by any person of an amount aggregating-

a) Rs. 1 Lakh or more in CASH

b) Rs. 10 Lakh or more by any other mode, against bill raised in respect of one or more credit cards in a FY.

A bank/ co-operative bank/ any other company or institution issuing credit card
5. Bonds or debentures   aggregating to Rs. 10 lakh or more in a F.Y . A company or institution issuing bonds or debentures
6. Shares aggregating to Rs. 10 lakh or more in a F.Y  for receipt of money from a person A company issuing shares
7. Buy Back  aggregating to Rs. 10 Lakh or more in a F.Y A company listed on a recognised stock exchange purchasing its own securities under section 68
8. Mutual Fund aggregating to Rs. 10 lakh or more in a F.Y A trustee of a Mutual Fund or such other person managing the affairs of the Mutual Fund
9. Foreign Currency  aggregating to Rs. 10 Lakh or more in a F.Y for sale of foreign currency Authorised person under FEMA
10. Purchase or sale of immovable property of Rs. 30 Lakh or more. Registrar or Sub-Registrar/ Inspector- General
11. Goods & Services exceeding Rs. 2 lakh

Receipt of cash exceeding Rs 2 lacs  for sale of goods and services

Any person who is liable for audit under section 44AB

7. Withdrawal Too Little or Investment Investing Too Much

  • If no withdrawal or little from the salary a/c suspicion may arise
  • Investment too much compared to income

8. Reversal of Deduction u/s 80C 

> LIC surrendered before 2 years

> ULIP surrendered before 5 years

> PF encashment before 5 years on change of job

> Deduction claimed u/s 80C for Repayment of  Housing Loan and selling of house before 5 years

9. Receiving of Gift

> Gift from non relative exceeding Rs. 50,000 taxable

> Gift from relative not taxable

> Gift on certain occasion not taxable

> Clubbing provision on gifting to be checked

> Donor may come under scrutiny if receiver under scrutiny

10. Declare  Exempt Income

> Capital gain from shares, mutual funds

> Dividend Income

> Maturity of LIC

Schedule

11. Matching of TDS in 26AS vs. ITR

> TDS in ITR should match with 26AS

> TDS on FDR normally comes through 26AS

12. Change of Employer during the year

  • To disclose income received from previous Employer
  • To disclose exemption claimed from the previous employer

13. Ensure correct TAN in ITR

Ensure correct TAN in ITR14. Disclosure of Assets & Liabilities

( If Total Income Exceeds Rs. 50 Lacs)

Schedule AI15. TDS Not Deducted On Property worth Rs 50 Lakhs

  • Buying immovable property of Rs 50 lacs or more
  • Deduct 1% TDS from the payment to the seller.
  • TDS to be deposited with Govt. using Form 26QB.

16. Full  Salary Detail In ITR –I From FY 2017-18

(Earlier the detail was to be filled in ITR 2 only )   

Part B17. Salary Income in ITR to match with Form 16  &  26AS

Form 16 Amount Amount
Salary as per section 17 (1) 30,57,579
Add : Value  of  Perks as per 17 (2)  detailed in  12 BA 16756
Total salary 30,74,536
Less : Allowances exempt u/s 10 21900
           Conveyance        19200  + Institute Fees 2700
Income  chargeable under the head salary 30,52,637
ITR-2 Amount Amount
Salary excluding  exempt allowances 30,35,880
Value of  Perks  ( after adjusting  21900) 16756
Income  chargeable under the head salary 30,52,637
26 AS   Amount Paid/ Credited    TDS deducted & deposited
30,74,536 7,24,237
Note : Here salary income as per ITR and 26AS not matching

18.Whether To Report All Bank Accounts ?

> All operative accounts are to be reported

> Dormant accounts not to be reported

> Dorman A/c i.e. non operative for 36 M

> Dormant if no transaction initiated

> Transaction : Withdrawal of cash ,cheque payment, Transfer of funds etc.

19.Have You not filed ITR for Last 2 Years ?

  • FY 2015-16
  • FY 2016-17

For both the year as above ,last date to file the ITR was 31.03.2018 . Now the time limit is exhausted.

20. Which Address In ITR

> May be 3 to 4 addresses quoted at various places.

> Addresses in Voter’s ID, bank account, Aadhaar card and PAN records may not match

> It is advisable to give address of the place where you currently reside.

21. Loosing Benefits If ITR Not Filed ?

> For availing loan facility like home, or personal.

> For visa and immigration processing

> For income proof/ Net worth certificate

> For claiming excess tax paid via refund

> Applying for a higher insurance cover

> Last and most important is your peace of mind

22. Full Payment of Tax Before Filing 

  • Tax Challan 280
  • Payment of self assessment

23. E- Verify your ITR or ITR –V 

  • Post ITR-V physical copy to CPC Bangalore within 120 days
  • Else E –verify through different mode
  • E- verify through linking your Aadhaar with your PAN on the e-filing website
  • E- verify through Net banking in the bank site
  • E- verify through Income tax e- filing portal with e-file menu option
  • E filing through Demat a/c

24.What to do if your ITR-V is Rejected

> ITR filed but  status showing as  “ITR-V Rejected”.

> Know reason of rejection on clicking of acknowledgement No

> If reason is  “Filing date has exceeded the due date”,  means  ITR-V is not reached to CPC-Bangalore within 120 days of e-Filing.

> What do I do now? File a revised return and send the revised ITR-V to CPC Bangalore.

> Other reasons for the ITR-V rejection either signature is missing or the ITR-V document is of “poor quality”.

> If the 120 days not elapsed, simply print a fresh copy of  ITRV, sign to CPC within 120 days

25. Detail of  Foreign Assets & Liabilities Required

Kept at any time during the financial year

  • Details of foreign bank accounts
  • Details of Financial interest in any Entity
  • Detail of Immovable Property
  • Details of any capital assets
  • Details of bank A/c for which you are a signatory
  • Detail of income derived from any source o/s India

More Under Income Tax

One Comment

  1. sundar says:

    Would like to know the applicability of interest received from Monthly income scheme from Post Office Under Sl.No. 3a & 3b..
    Also, do we need to declare the interest credited on Provident Fund Account / Public provident fund account under exempted income ?

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