5 things to keep in mind before you file your tax returns this year
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Back in the day, filing income tax returns (ITRs) was not an easy skill to master. Or so people thought. Most individuals relied entirely on tax filing professionals to help them file their ITRs. But today, since information is available right at the click of a button, filing tax returns has become much easier.

Anybody can file their ITRs online now, with just a little help from the internet. And that includes you too. Interestingly, the income tax e-filing website was recently revamped. That means even seasoned tax filing experts have something new to look forward to this year.

So, whether you’re going to be filing your own ITRs for the first time this year, or whether you’ve been doing this for years, a little help can help make the process simpler. On that note, here are 5 things to keep in mind.

 

1. The tax filing deadline has been extended

According to the Income Tax Act, 1961, the due date for filing your income tax returns for individuals not liable to tax audit and is not a partner to any firm is July 31 of each assessment year. However, the CBDT occasionally postpones this date, after taking into account any hardships that taxpayers may be facing. This year, with the aftereffects of the pandemic coupled with the challenges of the new income tax portal, a little bit of extra time was definitely needed.

The CBDT thought so too, because the tax filing deadline was initially extended to September 30, 2021, and has since been extended further to December 31, 2021*. So, if you haven’t filed your returns yet, remember to do it by the end of 2021.

*as on 21/10/2021

 

2. You need to choose between the old tax regime and the new one

Budget 2020-21 introduced the new tax regime, according to which taxpayers could enjoy lower tax rates coupled with very few deductions and exemptions. The old tax regime, meanwhile, comes with higher tax rates but offers more deductions and exemptions. Check out the rates for the two regimes here.

 

Income slab

Tax rate under the old regime

Tax rate under the new regime

Up to Rs. 2,50,000

Nil

Nil

Rs. 2,50,001 to Rs. 5,00,000

5%

5%

Rs. 5,00,001 to Rs. 7,50,000

20%

10%

Rs. 7,50,001 to Rs. 10,00,000

20%

15%

Rs. 10,00,001 to Rs. 12,50,000

30%

20%

Rs. 12,50,001 to Rs. 15,00,000

30%

25%

Rs. 15,00,001 and above

30%

30%

 

You can choose between either of these two regimes before filing your tax returns. If you have no tax-saving investments, the new regime with lower tax rates may be the better choice. However, if you have enough tax-saving investments, you could stick with the earlier tax slabs and claim the many deductions available, including Rs. 1,50,000 under section 80C.

 

3. Remember to choose the right ITR form

There are different Income Tax Returns (ITRs) for different kinds of taxpayers. The key difference lies in the nature of income that different taxpayers earn. All in all, there are seven ITR forms for tax filing this year, ranging from ITR-1 to ITR-7. Of these, the first four are relevant for individual taxpayers.

 

Choose ITR-1 if:

  • You are a resident individual
  • Your total income is Rs. 50 lakhs or lower
  • Your earnings only include salaries, income from one house property, interest income from other sources like interest, and agricultural income up to Rs. 5,000.

 

Choose ITR-2 if:

  • Your total income exceeds Rs. 50 lakhs
  • Your earnings include income from salaries, more than one house property and capital gains

 

Choose ITR-3 if:

  • Your earn income from your business or profession
  • You are a partner in a firm

 

Choose ITR-4 if:

  • Your total income does not exceed Rs. 50 lakhs
  • You have business income or income from profession computed on a presumptive basis

 

Choose ITR-5 if:

  • It is for any person except individuals or HUFs and entities filing ITR-7
  • This includes firms, LLPs, Association of Persons (AOPs), business trusts, investment funds etc.

 

Choose ITR-6 if:

  • It is for a company other than those that need to file ITR-7

 

Choose ITR-7 if:

  • It is for companies that are charitable or religious trusts, political parties, research associations, or news agencies

 

4. You need to keep some key documents ready

There are some documents that can make the tax filing process simpler for you. You may also need to keep some paperwork ready as a necessary part of ITR filing. Here are some documents that can be handy.

  • Your Form 16 and Form 16A, for details of the tax deducted from your income
  • Interest certificates from the bank for details of your interest income on deposits
  • Your Form 26AS, which is a consolidated annual tax statement
  • Proofs for tax-saving deductions and expenses applicable, such as your life insurance premium receipts, your PPF passbook, your home loan statement, your tax-saver FD receipt, and the receipt for payment of tuition fees, among others

 

5. You need to verify your return after filing it

Merely filing your tax return is not enough. Once that is done, you need to verify the return too. Only then is the filing valid. You can choose one of the following ways to verify your return.

 

  • Option 1: E-verify your ITR

You can do this using your OTP received on mobile number registered with Aadhaar or the net banking option within 120 days of filing the return.

 

  • Option 2: Mail the signed ITR-V acknowledgement to the IT authorities

You need to take a printout of the ITR-V acknowledgement, sign it, and mail it to CPC Bengaluru within 120 days of filing the return.

 

Summing up

Before you file your ITRs this year, make sure that you keep these important points in mind. This way, you can avoid any errors while filling out and submitting your return, and save yourself the trouble of having to file a revised return later. It also helps you steer clear of any penalties under the Income Tax Act, 1961.

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