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Filing Income Tax Return

July 30, 2015

The tax filing season is on and maximum companies must have issued Form 16/Form 16A to its employees/ consultants/ contractors for financial year 2014-15 (Assessment year 2015-16). Even if the form 16/ 16A has not been issued by the deductor, the tax deducted     details can be verified by the deductee online in 26 AS available on the income tax website

The due date to file the return for financial year 2014-15 is July 31, 2015 but has been extended to August 31, 2015. The due date for filing return by companies is September 30, 2015.

It is mandatory to file income tax return if the income before allowing deductions under chapter VI exceeds 2.5 lakh for the financial year 2014-15. The limit enhances to 3 lakh for senior citizens more than 60 years of age and 5 lakh for super senior citizen more than 80 years of age. E-filing of returns is now mandatory for all taxpayers even if the taxable income is below 5 lakh or if the Assessee is claiming for refund.

The income tax Department has issued new ITR forms which require comprehensive details of all bank accounts held by the taxpayer, details of all foreign trips and details of foreign assets/ foreign income that may be held by the taxpayer. However, the taxpayers have raised concerns on the complexity introduced in the returns and the process of return filing becoming cumbersome. The purpose of initially issuing SARAL/SAHAJ forms (simplicity in filing returns) itself was being defeated. This has forced the Department to withdraw the forms and to issue simplified forms requiring limited disclosures and making it easy for the taxpayers to file their returns themselves. Return filing process can be fragmented into simple steps ensuring checkpoints at each level to ensure error free return filing.

1. Selection of the form applicable

The first step in the return filing process is the identification of the correct ITR form applicable to a taxpayer. We have tried to summarize the form selection in the table below:

Form ApplicableWhen can be used byWhen cannot be used if/by

ITR 1

Individual having income from:
-salary/ pension
-one house property
-other sources (interest/ investment)

Income includes:
-income from more than one house property
-income from lottery/ race horses
-income includes income under head capital gain/ business/ profession
-income including exempt income more than 5000
-Income includes loss under head other sources
-income includes foreign income or foreign assets

ITR 2

Individual/ HUF whose income includes
-salary/pension
-more than one house property or brought forward losses
-income from capital gain
-income from other sources including income from lottery/ race horses

Individual whose income includes income from business/ profession.

ITR 2A

Individual whose income includes:
-salary/pension
-income from more than one house property
-income from other sources including lottery and race horses

Income includes
– capital gain
-income from business/ profession
-has claimed relief for taxes paid outside India
-has financial interest outside India.

ITR 3

Partners in firms with income
-from salary/ pension
-more than one house property or
-brought forward losses
-capital gains
-income from other sources including winning from lottery/ race horses
-profit from partnership firm

Taxpayer having income from
Sole proprietorship business/ profession

ITR 4

Individual/ HUF having income from
-proprietorship business/ profession

 

ITR 4S

Individual/ HUF having income from
-presumptive tax
-salary/ profession
-one house property (excluding cases where loss brought forward from previous year)
-other sources excluding winning from lottery and race horses

Income includes income from
-more than one house property
-race horses or lottery
-capital gains
-exempt income more than 5000
-speculative income or other special income
-agency business income
-assets include assets located outside India
-does not opt for presumptive income scheme

ITR 6

To be used by a Company

Company claiming exemption under section 11 (charitable trust can claim exemption under section 11)

2. Check bank statement

After identification of the relevant ITR form, the taxpayer should check all the credits in the bank statement. Check for credits apart from salary income like interest income, rental income or capital gain. All the income earned during the relevant financial year should be considered while preparing the return.

3. Verify TDS from 26 AS

Check the TDS deducted on various credits with that of 26 AS. If any income has been credited without deduction of appropriate TDS or at a lower rate, differential tax should be paid before submitting the return as per the slab rates applicable on the taxpayer. The online utility assists the taxpayer in calculating the differential tax as per the slab applicable. If there is any mismatch of actual tax deducted and that reflecting in form 26 AS, inform the deduct or and get the same verified. Utmost care should be taken to verify the TDS deducted filed in the return versus that being reflected in the 26 AS, as any mismatch leads to auto generation of demand notices after filing the tax returns.

4. Claim appropriate deductions

Ensure all investments made by the taxpayer have been claimed correctly and in order to maximize available benefit. Deductions like 80TTTA on interest on saving account interest should not be missed.

5. Ensure taxes due have been paid

In case the taxpayer has switched job in the same financial year it is likely that the deductions may not have correctly and tax might be payable. Recalculate feature of the tax utility issued by the Income tax department may be used to check all taxes due have been duly paid.

6. Check for possible errors in the return before filing

The income tax utility is a self sufficient utility that guides and verifies all the possible errors in the return. Validation of the return before filing will ensure any information missed out by the taxpayer. The bank account details should be checked in refund cases as all refunds are now issued in the bank account directly by the Department.

7. Online e-verification of the return

The department has introduced a new facility to do away the submission of hard copy of ITR V after making the online submission of the return. The e-verification however has not been made mandatory yet. The e-verification can be done by linking the aadhar card or linking the net banking/ ATM.

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