Last-minute rush to file ITRs as deadline nears2 min read . Updated: 30 Dec 2020, 07:06 AM IST
- The income tax department said up to 6pm on Tuesday, more than a million return forms were filed
The number of income tax returns (ITRs) filed each day for the fiscal year ended March is rising steadily as the 31 December deadline nears. The deadline was extended twice by a total of six months because of the pandemic.
Experts said that choosing the correct tax return form is crucial. For individuals, there are four forms—ITR-1 to ITR-4. Choosing the wrong one would lead to the tax department treating the form as defective, which will then need to be rectified within a specified time, said Kapil Rana, founder and chairman of HostBooks Ltd, an accounting services provider for small businesses.
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Once filed, the form needs to be e-verified either immediately or within 120 days by sending the signed copy of ITR-V to the department’s central processing centre in Bengaluru. The return can be e-verified even if the Aadhaar number is not linked to the permanent account number (PAN) that is used for filing the return. It can be done using the mobile number linked with the bank account disclosed in the income tax return.
The government gave extra time till the end of July to make investments and certain payments for claiming deductions from the taxable income. Accordingly, a separate column has been provided in the return form for filing these investments made between April 2020 and end of July 2020. These include investments in instruments of Life Insurance Corp. of India, Public Provident Fund, National Savings Certificate, mediclaim policies and donations under 80G of the Income Tax Act, which covers contributions to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund).
Besides income, details such as ownership of unlisted shares, directorship in Indian companies, holding of foreign assets and investments, cash deposit above specified limits, are to be filled in compulsorily. “It is also important to pre-validate bank account details in the income tax portal to expedite processing of the refund," said Divakar Vijayasarathy, founder and managing partner of DVS Advisors LLP.
Experts pointed out that there are a few disclosures that taxpayers should not fail to make in their returns. These include the income of minor child or spouse if their income is clubbed in the hands of the assessee, tax-exempt income, credits for taxes deducted or collected at source and interest income.
Interest income from savings accounts and fixed deposits need to be mentioned as income from other sources, and then the deduction can be claimed up to eligible limits—up to ₹50,000 in the case of senior citizens and up to ₹10,000 for others, said Rana.
“It is crucial to file taxes in the right ITR form. This depends on factors such as income sources, residential status, whether or not holding foreign assets, and so on," said Archit Gupta, founder and chief executive officer of ClearTax, a fintech firm offering taxpayer services.
For certain businesses and professionals with income above the specified threshold that require tax audits, the due date for filing return is the end of January 2021.
The income tax department said in a tweet that up to 6pm on Tuesday, more than a million return forms were filed, against 913,718 returns filed up to 5 pm on Monday.