Navigate last-minute tax filing with this handy manual

Missing the deadline can result in penalties and interest charges

The deadline for filing income-tax return (ITR) ends today (July 31). To expect the Income-Tax (I-T) Department to extend the deadline is futile. Filing your ITR on time is crucial to avoid penalties and interest charges. As we approach the finish line, here’s a detailed checklist of the documents you need to file your return, followed by a step-by-step guide to help you accomplish task without making mistakes.

Gaither all essential documents

Begin by collecting all the required documents. Some of the essential ones include Permanent Account Number (PAN) card, Aadhaar Card, Form 16, 16A, 16B, 16C, 26AS, Annual Information Statement (AIS), and Taxpayer Information Summary (TIS).  Furthermore, keep your salary slips, banks statements, investment proofs, interests’ income, and other interest certificates handy. Also gather information on capital gains from the sale of property, mutual fund and shares; dividend income received; and any income from foreign sources.

Take into account ESOPs

Many companies, especially in their early days, compensate employees through employee stock options (ESOPs), “Sometimes, these options are issued by a foreign holding company to the Indian employees of its subsidiary company. Those employees must report their ESOPs as foreign assets in their ITR,

Factor in interest income 

Interest income earned by taxpayers on savings account or an investments instruments such as term deposits, bonds, debentures, etc, needs to be disclosed under the heading “Income from other sources”

“Any deduction to be claimed against such interest should be provided in the deductions under Chapter VI-A. For instance, taxpayers can claim deduction up to Rs 10,000/- (senior citizens can claims Rs 50,000/-)”

Any interest income that is exempt from taxation (such as interest from Public Provident Fund) should be mentioned in the Exempt Income (EI) Schedule. The section under which the income is exempt from tax should be specified. “Reporting all exempt income in Schedule EI of ITR forms is mandatory,”

Choose the correct form

The significance of choosing the correct ITR form can’t be overstated. “Using the wrong from may render the ITR defective. The taxpayer would then be liable to receive a notice under Section 139 (9) of the I-T Act. The taxpayer could be asked to file her ITR again. If she fails to do so within the stipulated timeline, the ITR is treated as “not filed”

If you have switched jobs 

Sometimes an employee who has switched jobs may neglect to declare her salary income from the previous employer. Consequently, the new employer ends up deducting lower tax deducted at source (TDS). “Employees should transparently declare their past salary income to the new employer. This will ensure accurate TDS calculation by the new employer. Failure to do so could lead to interest levies under Section 234B and Section 234C, deputy general manager at Taxmann, an online source for research on taxes.

Crosscheck information in Form 16

The information provided in Form 16 can at times be incorrect. “Corroborate the information given therein with the actual document one holds.” The interest on home loan, for instance, is provided on a provisional basis in Form 16. While filing the return, the taxpayer should fill in the actual interest on a home loan paid by her.

Sometimes, employees don’t receive Form 16. “If the previous employer doesn’t provide Form 16, request it. If you still don’t receive it, file ITR using payslips for salary breakup and deductions, and 26AS for TDS, and pay the tax due.

Refer to TDS, Form 26AS and AIS

Form 26AS is a consolidated statement that reflects all tax-related information, including TDS, tax refunds, and more, linked to your PAN. Check Form 26AS regularly to ensure that the TDS deducted by various deductor matches the actual tax liability. Do so while filing the ITR at the last minute, too.

“If you find any discrepancies, take prompt action to rectify them with the relevant authorities,”

AIS is a tax passbook of the assesses that provides information about prepaid taxes and prescribed financial transaction entered into during the relevant previous year. ”Match information in AIS/TIS with that in Form 26AS to claim TDS appropriately in the ITR form.  

Pay your tax due

Before you file your ITR, determine your final tax liability. Surana says you need to claim credit for TDS paid at this stage. This can be done by subtracting the total TDS amount from the total tax liability. If there is a balance, it must be paid. If taxes already deducted exceed your tax liability, you will receive a refund from the department once your ITR has been processed.

Consequences of missing deadline for filing ITR can have consequences. “Taxpayers may face penalties ranging from Rs 5,000/- to 10,000/- depending on their income. An interest charge of one per cent per months or part thereof on the unpaid tax amount must be paid under Section 234A. Delayed filing can also result in additional penalties under Section 271H for non-compliance with tax collected of source or TDS filing obligations, which could range from Rs 10,000/- to Rs 1 lakh.

WHICH ITR FORM IS RIGHT FOR YOU?

ITR-1: Appropriate for individuals with income under Rs 50 lakh who don’t own more than one house property

ITR-2: Suited for individuals or Hindu Undivided Families (HUF) with income comprising salary/pension, house property, unlisted equities, capital gain and foreign income.

ITR-3: Used when there’s income from a proprietary business, or individual is engaged in a profession.

ITR-4: Relevant when income includes presumptive income under Section 44AD, 44AE, 44ADA and salary up to Rs 50 lakh.

ITR-5: Intended for firms, limited liability partnerships, association of persons, body of individuals, artificial juridical persons, estate of deceased or insolvent, business trusts and investment funds.

ITR-6: For companies.

ITR-7: For persons required to submit returns under Section 139 (4A) to 139 (4F). 

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