How To File Income Tax Returns?

Until a few years back, filing tax returns used to be a mammoth task and tax payers would prepare themselves to waste an entire day in the income tax office. However, things have changed in the last five years or so. With the help of technology, filing your returns has become a cakewalk. Now you can either file your return with the help of a Chartered Accountant, who will charge a minimum of Rs 3000 (as per the latest ICAI directives), or online, by yourself.

KK Maloo, a professional accountant says, “It really depends on the assessee, whether he/she wishes to seek the help of professionals for filing Income Tax Returns. However, it is my personal opinion that in case the assessee has income under multiple heads, then he/she should seek the help of professionals. It would be very beneficial for the assessee, as only a professional can make him/her understand the advantages that the assessee can avail under the law.”

Swati Goyal, also a chartered accountant, seconds Maloo’s argument. She asserts that if a salaried-class employee is aware of the income tax provisions, he/she can file return on his/her own but to be on the safer side and to avoid any complications, taking the help of a professional is always advisable.However, if you wish to save on that amount and have no issues with calculations, you can file your returns on your own. To make the process convenient for tax payers, the Ministry of Finance has launched an online tax-filing scheme. Instead of going all the way to the income tax office, you can conveniently file your returns online now.

Filing E-returns

E-filing is the process of filing your tax returns electronically, over the internet. Various web portals have been designed and designated to help you file returns. The inter-net allows you to file your returns from the comfort of your home or office, at any time of the day, without being bogged down by lengthy procedures. Remember the following points when filing e-returns: -

You need to register with the portal through which you wish to file your returns. Most tax return filing sites are user-friendly, and help you through the process in a step-by-step manner. You can achieve the same task by down-loading an Excel utility from the IT-department website.

Details such as the name, address, PAN, total salary, deductions and so on are collected in a digital format.

An ITR XML file is generated, which is your electronic income tax return. You need not try to make sense of it, as it is a bit technical.
You will need to upload this ITR XML file on the Income Tax website. To do this, you need to create an account on the Income Tax website by using your Permanent Account Number (PAN). Once uploaded, an acknowledgement receipt called ITR Form-V will be generated. This needs to be printed, signed and sent to the IT Department within 120 days of e-filing.[PAGE BREAK]

You will receive a confirmation from the IT Department acknowledging the receipt of ITR-V. This is the final acknowledgement, and concludes the e-tax filing process.

“Physical filing involves a lot of documentation and compilation of information, which becomes a cumbersome exercise at the department’s end as well as at the assessee’s end. Hence, online filing should be accepted enthusiastically by the assessees. Further down the line, physical filing of Income Tax returns has to vanish,” says Maloo in this regard.

However, Abhay Arolkar, another professional accountant says, “Despite the on-line filing becoming a norm, physical filing may not completely vanish, because every person may not necessarily have the infrastructure to file the return on-line.”

Filing Returns After The Last Date
As mentioned earlier, 30th September is the due date for filing income tax return for corporate assessees and other assessees who are required to get their accounts audited under Income Tax Act 1961 or under any other law for the time being in force. For others, it is 31st July every year, as prescribed under section 139(1). However under section 139(4), a belated return can be filed before the expiry of one year from the end of the relevant assessment year, or before the completion of assessment, whichever is earlier. U/S 271F, “If a person fails to furnish return of income as required by section 139 before the end of relevant assessment year, the assessing officer may impose a penalty of Rs 5000/-”.

Consequences of not filing tax returns within the due date:

• Interest u/s 234A: Interest for default in furnishing Return of Income. If the return is furnished after the due date, then the assessee shall be liable to pay simple interest  at one per cent for every month or part of the month for the period commencing from the due date to the date of furnishing the return on the amount of Net Tax payable by the assessee, after considering Advance Tax, TDS, TCS and other allowable reliefs.

• Penalty u/s 271F: Penalty for failure to furnish return of Income. The assessing officer may direct the assessee to pay a sum of Rs 5000/- by way of penalty if he/she fails to furnish the return before the end of the relevant assessment year.

• Disallowance to carry forward losses: If the assessee has sustained a loss during the previous year under the head Profits and Gains from Business and Profession and the head Capital Gains, and claims to carry forward such losses as per the provisions of the Income Tax Act, then he/she has to furnish the return within the due dates, otherwise the losses under the respective heads of income are not allowed to be carried forward.

• Time Barred Return: The returns of the relevant previous year shall become time barred (could not be filed) if they are not furnished at any time before the expiry of one year from the end of the relevant assessment year (i.e. for AY 2011-12, the returns become time barred if they are not filed before March 31, 2013.)[PAGE BREAK]

Useful Tips
Beware of emails that feature Web links. These links can be part of a phishing scam that takes you to look-alike Web pages designed to steal your sensitive personal information, from your PAN to credit card account information. If you need to log in, do so independently and through the log-in Web page – not by clicking on a link.

When you go to file your taxes, make sure you’ve reached the correct site. One easy way is to look for a green address bar which indicates that the Web site is authentic.

• Make sure that you are entering your personal information in a secured session by looking for https:// A Web address beginning with “https” means that that there is an encrypted connection between your browser and the Web site’s server, indicating that your communications are secure and cannot be intercepted.

• When you finish your taxes, be sure to log out of your session. If you don’t log out, fraudsters can potentially log in to your session after you leave the site.

• Do not respond to any tax issues or requests by fax. You might receive an email scam requesting you to send a fax with personal information to “The Income Tax Department”. Remember, the Income Tax Department will never request personal information via fax.