Saturday, April 9, 2011

For salaried taxpayers - INCOME TAX HAPPY RETURNS


For salaried taxpayers, while the employer deducts the tax at source, it is important to collect all the tax deducted at source (TDS) certificates for income other than salary to be mentioned while filing the income tax (I-T) returns. Though the Finance Bill, 2011, has proposed that filing of tax return may not be required “for certain persons as may be notified” in the case of salaried taxpayers, where there is no other source of income, the government is yet to notify the persons who qualify for this.For individuals, the Saral II form is a simple two-page form and is meant to simplify filing the tax return. For example, a person owning a house that is self-occupied or rented can report the income/loss from the property in Saral II, unlike earlier where a separate form was required to be filled, mentioning details such as address of the property, name and PAN of the tenant. Similarly, as per I-T guidelines, TDS is to be paid on interest income on term deposits if the total interest income during a financial year exceeds Rs.10,000, and income from dividends accruing from shares and mutual funds, and these need to be mentioned while filing returns in the Saral II form under the head “income from other sources”. The Saral II form has made it mandatory to give details of all high transactions expenses like credit card purchases of R2 lakh-plus, deposit of cash over R10 lakh in savings bank account, purchase of shares of R1 lakh and above and purchase of mutual funds of R2 lakh and above. However, Saral II, is not applicable for income/loss from more than one property, brought-forward loss from house property and income from lottery or horse. In such cases, the taxpayer will have to file the detailed tax return form No 4.The I-T department has also made the filing process simpler where one can file it in person, electronically or through authorised intermediaries. For filing online, one needs to download the return preparation software from, fill the return offline and generate an XML file. Then one should go to the IT department website and register by filling the basic details such as name, PAN, date of birth, etc, and create a user ID and password and upload the XML file. Once successfully uploaded, one needs to take a printout of the acknowledgment details that would be displayed. If the return is not digitally signed, the taxpayer needs to take a printout of ITR-V and send it to the I-T department in Bangalore. Anassessee does not have to submit the original Form 16 or rent receipt or certificate of the total interest and principal paid from the housing finance company in case of a housing loan. The I-T department forms internal guidelines every year for selection of assessment cases and if the return is selected for an audit, the income tax officer may require some additional information to verify the authenticity of the taxable income as stated by theassessee in the return filed. At times the assessee may also be asked to appear in person for furnishing the additional information. For example, the I-T official may ask for the Form 16 showing the details of gross salary paid and taxes deducted. The official can even ask for rent receipts and the rent agreement with the landlord if any rent exemption is claimed. The department can also ask for details of savings bank interest, where theassessee will have to produce copies of bank statements showing the interest amount. It is also necessary to collect the certificate of the total interest and principal paid from the housing finance company in case of a housing loan. Interestingly, there is some relief for senior citizens and small taxpayers on scrutiny. In a recent press note, the government has mentioned that during financial year 2011-12, cases of senior citizens and small taxpayers filing income tax returns in ITR-1 and ITR-2 will be subject to scrutiny only where the the I-T department is in possession of credible information. The release clarifies that senior citizens would be individual taxpayers who are 60 years and above, and small taxpayers would be individual taxpayers whose gross total income, before availing deductions under Chapter VI A, does not exceed R10 lakh per annum. –

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