Tax Filing season is almost over, but there are still a few of you who are trying to figure out the easiest and the most efficient way of filing your tax returns.
Naresh was appalled to know that everyone at his workplace was busy with the tax filing procedure. He had thought that since TDS has been deducted from his income, he need not worry about his tax returns. However, one of his colleagues told him that he was filing his tax returns and claiming the deductions thus reducing his tax liability.
Now that Naresh got to know about this and learned that the due date of filing the tax returns is 31st July 2017, he was worried. It is then that he decided to contact his Chartered Accountant friend, Harish, for help. Upon hearing the entire problem, Harish first asked Naresh to calm down. “Do not panic. We still have time on our hands to file your tax returns. Let me help you”, he said.
Harish then asked Naresh to give him his Form 16 that he received from his employer, his PAN card and his Aadhaar Card. Harish explained, “You should keep all the essential information handy as it is required to file your taxes. Though Form 16 is vital for filing the ITR, you can still file your returns without Form 16”.
He then asked him to disclose all his active bank accounts. “But why all the bank accounts? Only my salary account should matter to the IT Department, right?”, Naresh asked. Harish said, “Interests received from savings bank account, fixed deposits, etc., are considered to be income from other sources. Therefore, to keep track of your total income, the IT department needs your savings and current account details. Also, if you are eligible for a tax refund, it will be transferred to your preferred bank account, which you will have to specify while filing your ITR.”
“You can also download Form 26AS from the TRACES website and submit it. This form is an Annual Statement, which gives a live record of all your tax-related activity done through PAN.” Harish further explained. He then asked Naresh if he has made some investments and if he can provide the documents relating to the same, using which he can try and reduce some tax liabilities. Looking at Naresh’s confused face explained why investment proofs were necessary. Harish added, “Documents related to your investments, life and medical insurance premiums, education loan repayments, pension plans, donations to charity, home loan interest payments, and medical treatment of elderly parents are crucial while filing ITR. These documents will allow you to claim tax deductions under various Sections of the I-T Act.”
“Since this is the first time you are filing your tax returns, you might not be aware of advance tax payments or self-assessments, but in the future, if you make such payments, you will need to produce the tax payment challans issued for them”, Harish said.
After getting all the documents ready Harish and Naresh filed the latter’s tax returns. Harish then helped Naresh e-verify his tax returns, so that the tax calculation starts and the tax refund is released, if any.
In case Naresh was an NRI, his tax filing procedure would have been slightly different. NRIs should file their tax returns if they want to claim a tax refund or when they have a loss that they wish to carry forward. As the IT Department has now introduced a new section in both ITR 1 and ITR 2 tax return form, all non-resident individuals are required to disclose the details of their bank accounts outside India. There are no higher basic exemptions given available to NRIs as compared to the exemptions allowed to the residents of India. An NRI who has settled abroad but earns some income in India has to pay taxes on the same. However, to avoid paying taxes on the same income in both the countries, as an NRI, you can use the provisions on DTAA (Double Taxation Avoidance Agreement), a tax treaty that India has signed with various countries.
[ Read: NRI Tax Filing Guide ]
You might panic seeing that the due date for tax filing is near and you still haven’t filed your tax returns, but it isn’t that difficult if you get the right guidance and help. To effectively file tax returns, you may seek help from a tax expert. Resident or not, it is imperative to file your tax returns to avoid notice from the Income Tax Department. Therefore, I suggest you guys get going with your tax filing process, to avoid problems ahead.