It’s that time of the year again. You knew all along that it would come, whether you ignored or waited for it. And you know you can’t run away from it any more. We are talking about 31 July, which happens to be the last day for filing income tax-returns for all salaried Indians, be they resident or non-resident.
Of course, you must have done everything legally possible to maximize your freedom from tax. But then, the law permits you only that much. You might also have wondered about the word return being used for an outgo. Maybe it’s because governments always want citizens to see things from their point of view, perhaps for the larger good.
Filing tax is compulsory for everyone whose gross total income—the income under the five heads (salary, business, capital gains, house property or other sources) before allowing for any deductions such as insurance premium—exceeds the basic exemption limit. For financial year 2007-08 (assessment year 2008-09), this limit was Rs1.45 lakh for women below 65 years, Rs1.95 lakh for senior citizens (above age 65) and Rs1.10 lakh for other individuals. It is compulsory for every person exceeding these limits to file the return before the prescribed date, even if their employer has taken care of their liabilities by cutting the tax from their salaries. This is known as tax deducted at source or TDS.
Filling up the form
There are two income-tax return forms, ITR-1 and ITR-2, for salaried individuals. Your sources of income (they will fall under one or more of the five sources mentioned earlier) will decide your form. You will have to submit the filled form to the tax authorities and get an acknowledgement from them. Use ITR-1 to file your tax return if your income is from salary, pension or interest. In the case of any capital gains, income or loss from house property and income from any other source, you will have to use ITR-2. You can go to www.incometaxindia.gov.in/download_all.asp to download these forms. You will find ITR-1 relatively simple to fill up. A prerequisite for the exercise is Form 16, the certificate that comes from the employer showing the TDS from the income chargeable under the head salary. ITR-1 is almost a replica of Form 16. All you have to do is pick the numbers from Form 16 and put them in the ITR form.
Apart from salary income, there is an important component of income that many taxpayers ignore while filing their returns. It is the interest income earned from funds lying in savings accounts in banks. Disclosing this, however small it may be, is mandatory. You just have to add the total interest credited to your bank account in the last financial year. Scrutinize your income-tax return to ensure that no taxable income is undisclosed. After you file your return, the tax authorities will hand you an acknowledgment. That’s it, you are through with the filing of returns.