There's some great news for you. The deadline to file ITR has been extended from July 31st to August 5th. You have 5 full days to file ITR. Yes, you had complains. The online filing system of the tax department had developed a technical snag on Saturday. You were not able to file your returns. Now you have the much needed time to file ITR.
You might be one of those guys who waits till the last minute to file income tax returns. But, better late than never. Yes, I know it's rather late, but it would be great if you could go through these 4 things to do before filing income tax returns.
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The first thing you must know? Do you need to file income tax returns? If the gross taxable income after exemptions, but before deductions, exceeds the basic limit, or if a tax refund has to be claimed, you have to file income tax returns.
You have to file income tax returns if your gross taxable income is above the basic exemption limit. The basic exemption limit is INR 2.5 Lakhs a year for citizens who are below 60 years of age. It is INR 3 Lakhs a year for senior citizens who are between 60 - 80 years of age and it is INR 5 Lakhs a year for super senior citizens who are above 80 years of age.
Your gross income is computed after taking into account the exemptions like house rent, conveyance and other allowances, but before any deduction. Let's say you are less than 60 years and earn more than INR 2.5 Lakhs a year. Deductions may reduce your tax to zero. But, you still need to file income tax returns.
This is the biggest difficulty many tax payers face. Which form to use while filing income tax returns. You might be tempted to file returns using ITR 1, because it's really simple to fill. But, this could be a bad mistake.
If you have income from salary or pension, income from one house property or income from other sources like dividends, interest income and so on, you need to file income tax returns using ITR 1 or SAHAJ.
If you have income from salary or pension, income from house property, income from capital gains, income from other sources as a partner in a firm or even agricultural income which exceeds INR 5,000, you need to file income tax returns using ITR 2.
If you have income from salary or pension, income from house property, income from other sources or income from a business or profession, you need to file income tax returns using ITR 3.
Filing your ITR this year is slightly different from the earlier years. The income tax department has a new weapon to catch tax defaulters called Aadhaar. If you have Aadhaar, you must mention it while filing ITR. The Finance Ministry has said that for e-filing, it would be sufficient to just quote Aadhaar or the acknowledgement number if you have applied for Aadhaar.
But, there is something more that needs to be done. You also need to link your PAN to Aadhaar, any time before 31st August 2017. Your tax returns will not be processed unless you link PAN with Aadhaar.
Did you deposit more than INR 2 Lakhs in cash after demonetization? You better mention this when you file income tax returns. The Government demonetized Rs 500 and Rs 1000 notes on November 8th 2016. You had time till December 30th 2016 to deposit these old notes in your bank accounts up to any limit.
If you neglect to mention these cash deposits, the income tax department will match this information with your ITR. If there is a mismatch, you could get a tax notice.
So what happens if you don't mention cash deposits made during demonetization? Well, if you are caught, the penalty is 50% of the amount of tax payable on under-reported income. If the under-reporting is due to mis-reporting, the penalty can be 200% of the tax payable.
The deadline to file ITR was July 31st 2017. It has been extended to August 5th 2017. If you have missed filing ITR, this is a golden opportunity. You have 5 days to do so. Filing your tax returns in time makes sure you avoid penalties and future problems with the tax department. Be Wise, Get Rich.
Mr C.S.Sudheer is a management graduate. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.