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If you've passed the hurdle of paying taxes in the month of March, then the next task at hand is to file your income tax returns -- a necessity that most people consider a chore, or don't quite know how to go about.
We're going to address this misconception, and describe to you how easy it actually is.
From a legal standpoint, you are obligated to file a return of income, if your taxable income during the year has exceeded the exemption limit of Rs 150,000 (Rs 180,000 in case of women and Rs 225,000 in case of senior citizens).
Where do you start?
Step 1
Begin by assembling all the necessary documents. These are:
Form No. 16: If you are employed, then your employer should have given you this. It contains information on your salaried income, and the amount of tax deducted from that salary.
Form No. 16A: Over the course of the year, you would have conducted transactions with banks and companies, perhaps extended a loan or rented a property, in which case you need to collect this form from all the people who have deducted tax while making a payment to you.
Summary of all bank accounts: This summary will provide information on your income and expenditure, as well as investments for the year.
Details of property owned: If you have bought some property during the year, you will need details of rent received and receipts of municipal tax paid during the year. If you have bought this property on a loan, carry the loan details and a copy of certificate of interest paid.
Sale and purchase bills/documents for investments/assets sold: In case of a large number of transactions, it is advisable that you prepare a statement of sale and corresponding purchase of these investments and arrive at the amount of profit or loss, before actually calculating your taxable income.
Details of tax payments made: This is required only if you have made paid taxes in advance.
Step 2
With all your documentation in place, you need to then select the proper Income Tax Return form, or ITR, which is based on the nature of income earned.
For individuals:
|
Form No. |
Applicability |
|
ITR 1 |
Meant for Individuals, who have |
|
ITR 2 |
Individuals / HUF not having any income on account of carrying out business / profession or on account of being a partner in a partnership firm. |
|
ITR 3 |
Individuals / HUF who are partner in a partnership firm and does not carry out any other separate business / profession. |
|
ITR 4 |
Individuals / HUF who is carrying out business / profession under a proprietary concern. |
Step 3
How to file your tax returns:
You can file your returns either physically, or electronically.
Therefore, take a print out of the respective ITR form along with the Acknowledgment form and file it with the Income Tax Officer.
OR
Get the tax return in a valid XML format (through the Income Tax department site or other online tax preparation sites). Then select the respective ITR form and upload the XML file. You will receive an acknowledgement. Make sure to upload the file with a digital signature to complete the process of filing your returns.
Whether it is electronic or physical, under the new procedure, you do not have to attach any documents or enclosures while filing your returns.
The last date for filing returns for the year ending March 31, 2009 is July 31, 2009, and for individuals who have to get their books of accounts audited under the Income Tax Act, it is October 31, 2009.
If you file your returns after the last date, you will be charged a penal interest at the rate of 1 per cent per month of delay. However, if such a return is filed after March 31, 2010, apart from the penal interest, you will also be liable for a penalty of Rs 5,000.
Remember that having tax deducted at source if you are employed is only half the journey. You need to file your returns to complete the process. The point is to avoid hassles for you and your tax professional, so prepare to file your returns as early as possible instead of waiting for the due date to arrive.
