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 income sources mentioned in the earlier articles) will decide which form you need to use. 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 file ITR-2. You can go to www.incometaxindia.gov.in/download_all.asp to download any of these forms.
REMAINING TAX LIABILITY
Subtract your TDS (tax deducted at source) from the tax liability that you computed earlier to ascertain if you still have to pay any taxes. If you do, fill Form 280 and deposit it in any bank, along with the tax payable, via cash or cheque, before filing your returns. You can also pay this through Internet banking. In both cases, you will get a receipt number which has to be quoted in the ITR form.
Also See File on the net (PDF)
WHAT TO DO FOR A REFUND
If you are entitled to a tax refund, in addition to your contact details, enter your bank details in the form. It is equally important to mention the MICR number of your bank branch. MICR is a nine-digit number mentioned next to the cheque number on a cheque. If you file your return on time, you will get interest on the refund amount from the beginning of the assessment year.
HOW TO FILE
The actual filing of the return can be done either through the traditional paper form or electronically over the Net.
Offline: You have two options—you can either submit the ITR form at the nearest income-tax office (ITO) after filling it up yourself, or get a chartered accountant (CA) or a tax-return preparer (TRP) to do it for you. You can also take help from the public relations officer of the ITO to fill the form. No documents or investment proof need be attached with the form, but remember to take photocopies or originals with you to the ITO. These will come in handy if you are asked to authenticate your numbers. The CA will charge a fee in accordance with your income slab and number of income sources. It typically ranges from Rs300-2,000.
Online: Known as e-filing, this method is fast catching up. Ankur Sharma, managing director of an an e-filing site, TaxSpanner.com, says there has been an increase in e-filing this year. “Unlike last year, when e-filing picked up only in June, activity has been building up since May this year,” he says. Last year, nearly 4.8 million returns were e-filed. Out of this, 4 million were filed by individuals and non-corporate entities.
Sharma says the availability of digitally signed Form 16s from employers is making e-filing popular: “Employees who have (a) digitally signed Form 16 would simply have to send it to us and their returns would automatically be filed. They wouldn’t even need to fill up the form.”
In order to e-file your returns, you will have to feed your Form 16 details into the software of the website, which automatically generates an electronic return in XML format. This format helps in the sharing of structured data across different information systems. A PDF file of the relevant ITR form is also created along with the XML format on your desktop. You can download this ITR form, submit it at the ITO and get an acknowledgement.
Alternatively, save the XML file on your desktop and then upload it on www.incometaxindiaefiling.gov.in , the government site. Private sites upload it on the government site on your behalf. You will receive the acknowledgement by email.
USING A DIGITAL SIGNATURE (DS)
Using a DS will help you complete the e-filing process without paperwork and visits to the ITO. In case DS is used, the acknowledgement is emailed to the taxpayer.
Why DS? Though not mandatory, it is advisable to use a DS for filing your return electronically. A DS authenticates electronic documents in the same way a handwritten signature authenticates printed documents. However, using a DS makes e-filing a little expensive—every website has its own charges and it has a validity of one or two years. The cost of a DS may be built into the package you choose.
A DS can be acquired from any of the agencies authorized by the government for the job, including the private and government websites meant for filing tax returns. To get your DS from a tax site, download the relevant form, fill it up, attach the required documents, such as your identity and address proofs, and courier them to the address concerned. The entire process of acquiring a DS may take around 15 days.
E-FILING WITHOUT DIGITAL SIGNATURE
E-filing without DS is equally convenient now. After filing the returns online, the taxpayer receives an acknowledgment called the ITR-V. Till 2008, ITR-V had to be submitted at the nearest ITO, making e-filing a manual affair at the end. From this year on, this form just needs to be couriered to a specific I-T office in Bangalore, making the process convenient for assessees.
Among the major sites designated to offer e-filing facilities are www.taxspanner.com, www.taxsmile.com and www.taxshax.com. Costs vary across sites. The government too has a site that offers this facility free of cost— www.incometaxindiaefiling.gov. in/portal/index.jsp . You have to use your permanent account number (PAN) as the username for registering on this site.
All the three non-government sites mentioned above are secure and easy to navigate. They are different from each other on two major counts—the number of income sources they cover and the process. Get clarity on the cost and features offered before opting for one. Says Ravi Jagannathan, managing director of www.taxsmile.com, “Check if special cases like arrears or clubbing of income are also taken care of.” This will save you the trouble of starting the process all over again. The cheapest package would normally cover only salary income. You may require the advanced version if you have income from other sources. Taxspanner is the only private site through which you can fill ITR-4, meant for individuals with business or professional income.
WHAT IF YOU MISS THE DEADLINE?
In case you miss the 31 July deadline, you will be left with two options. If there is no pending tax to be paid, you may file your return without paying any penalty by 31 March. However, if you still have to pay tax and miss the deadline, you will have to pay a monthly penal interest if you file your return by 31 March. If you cross that deadline too, you will have to pay a penalty of Rs5,000, along with the monthly penal interest.
Implications: In case you are entitled to a refund, interest on it will be given to you only from the date of filing the return. If you file your returns on time, you can revise your return form to correct any mistakes or deletions, such as missing a particular deduction, by 31 March. However, if you do not file your return on time, you will not be able to avail of this facility. Also, if you have incurred losses on shares during the year, you will be able to carry forward the losses for future tax set-offs only if you file the return on time.
Now that you have the necessary details, start the return-filing process now, when time is on your side. And relax till the same time next year.
Cap on expenses on insurance products soon
The Insurance Regulatory and Development Authority (Irda) is planning to introduce overall caps on expenses of various insurance products to give a boost to your investments. If the proposal comes through, an insurer will have to tailor its products in such a way that the overall cost, such as commissions, mortality charge, fund management charge and administrative costs, are well within the overall cap. As of now, the costs of policies offered by the same insurer differ hugely, though they conform to the overall management expense cap. This leaves a window for misselling as agents are likely to push policies with a higher cost for higher commissions.
Flexible home loan products from SBI
State Bank of India has launched two flexible home loan products. The first scheme, SBI Easy Home Loan, is meant for loans up to Rs30 lakh. It offers an interest rate of 8% in the first year and 9% in the second and third years. Thereafter, the bank will levy a floating rate that is 2 percentage points below the State Bank Advance Rate (Sbar) or a fixed rate that is 1 percentage point below the Sbar with a five-year asset. The second scheme, SBI Advantage Home Loan, is for loans above Rs30 lakh. In this case, the interest will be fixed at 8% in the first year, and 9.5% in the second and third years. From the fourth year, you can choose between a floating rate at 1 percentage point below the Sbar and fixed rate of 0.5 percentage point below the Sbar with a five-year asset. Under both schemes, the rate of interest will be charged on a daily reducing balance.
Making free local calls through computers possible soon
If you have Internet access, you may be able to save on your telephone bill. The government is considering reducing the entry fee to be paid by Internet service providers (ISPs) for a licence to provide pan-India Internet telephony from Rs1,651 crore to Rs43 crore. Once ISPs qualify to do that, subscribers can make and receive free local calls through computers to fixed line phones as well as cellphones. STD calls will be as cheap as 40 paise to Re1 per minute. As of now, it is illegal to make local calls to fixed line phones and cellphones through your computer.
Invest back the profit on your investments
In most mutual fund schemes, you can choose what you want to do with the profit made on your investments—get it in hand or plough it back into the scheme. The basic difference is in the way the returns on investments are treated. In a growth option, any profit made on investment is not distributed but retained in the scheme. In a dividend option, the investor gets the return as dividend. Another difference is in the net asset value (NAV). In the dividend option, the value of the scheme’s assets fall once the dividend is paid out. The scheme’s NAV is usually lower in the dividend option.
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