The number of daily income tax returns filed for FY20 is steadily rising as the deadline after two extensions is set to expire on Thursday for those who do not require their accounts to be audited.
Experts point out that one of the key things to remember is to opt for the appropriate tax return forms. For individuals, there are four forms—ITR-1 to ITR-4. Choosing the right one is important as wrong selection would lead to the tax department treating the form as defective which needs to be rectified within a specified time, explained Kapil Rana, founder and chairman of HostBooks Ltd., an accounting and finance service provider for small businesses.
Once filed, the form needs to be e-verified either at the same time or within 120 days by sending the signed copy of ITR-V to the department’s central processing centre in Bangalore. The return can be e-verified even if the biometric identification number Aadhaar is not linked with 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 had given extra time till 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 to 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).
Apart from income, other details like details of holding of unlisted equity shares, directorship in Indian companies, holding of foreign assets and investments, cash deposit above specified limits, etc. are to be filled in compulsorily. “It is also important to pre-validate the bank account details in the income tax portal to expedite the processing of refund,” explained Divakar Vijayasarathy, founder and managing partner of DVS Advisors LLP., a consultancy.
Experts pointed out that there are a few disclosures that tax payers should not fail to make in their tax returns. These include 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 account and fixed deposits need to be mentioned as income from other sources and then deduction can be claimed upto to eligible limits—upto Rs 50,000 in the case of senior citizens and upto Rs 10,000 for others, explained Kapil 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. It is essential to pre-validate bank account details if you are eligible for any tax refund,” said Archit Gupta, founder and chief executive officer of ClearTax, a fintech firm offering tax payer services.
For certain businesses and professionals with income above the specified threshold and require tax audits, the due date for filing return is end of January 2021.
Income Tax department said in a tweet that upto 6 pm on Tuesday, more than a million return forms were filed, against 9,13,718 returns filed upto 5 pm on Monday.
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