Income Tax Filing 2017-18: List of various ITR forms and which return form to use

Here are the list of various ITR forms explaining who can use the return form.
A crisp income tax returns (ITR) form for salaried individuals has been introduced, doing away with some columns to simplify the filing of returns.

ITR 1-SAHAJ, 2 and 2A can be used by individual or Hindu Undivided Families whose income does not include income from business. ITR 4S – SUGAM can be used by an individual or HUF whose income includes business income assessable on presumptive basis.
Here are the list of various ITR forms explaining who can use the return form

ITR-1 SAHAJ
This Return Form is to be used by an individual whose total income for the assessment year 2017-18 includes:-
(a) Income from Salary/ Pension; or
(b) Income from One House Property (excluding cases where loss is brought forward from previous years); or
(c) Income from Other Sources (excluding winning from lottery and income from Race Horses, Income taxable under section 115BBDA or Income of the nature referred to in section 115BBE)
However, further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, this Return Form can be used only if the income being clubbed falls into the above income categories.

FORM ITR-2
This Return Form is to be used by an individual or an Hindu Undivided Family who is not eligible to file Sahaj ITR-1 and whoseincome chargeable to income-tax under the head “Profits or gains of business or profession” is in the nature of interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from a partnership firm.

FORM ITR-3
This Return Form is to be used by an individual or a Hindu Undivided Family who is carrying out a proprietary business or profession.

ITR-4 SUGAM
This Return Form is to be used by an individual/ HUF/ Partnership Firm whose total income for the assessment year 2017-18 includes:-
(a) Business income where such income is computed in accordance with special provisions referred to in sections 44AD and 44AE of the Act for computation of business income; or
(b) Income from Profession where such income is computed in accordance with special provisions referred to in sections 44ADA; or
(c) Salary/ Pension; or
(d) Income from One House Property (excluding cases where loss is brought forward from previous years); or
(e) Income from Other Sources (excluding Winning from Lottery and Income from Race Horses).
Note 1: The income computed shall be presumed to have been computed after giving full effect to every loss, allowance, depreciation or deduction under the Income-tax Act.
Note 2: Further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, this Return Form can be used only if the income being clubbed falls into the above income categories.

FORM ITR-5
This Form can be used by a person being a firm, LLPs, AOP, BOI, artificial juridical person referred to in section 2(31)(vii), persons referred to in section 160(1)(iii) or (iv), cooperative society, registered societies and local authority. However, a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4F) shall not use this form.

FORM ITR-6
This Form can be used by a company, other than a company claiming exemption under section 11.

Form ITR-7
This Form can be used by persons including companies who are required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) or section 139(4E)or section 139(4F).

Source : Zeenews

Income Tax filing 2017: common mistakes that you should avoid

For the salaried individual, taxes are automatically deducted and paid to the government while for those who get their income through business or profession, have to pay income tax four times a year.

However, filing of income tax return –the annual ritual –can get a little irksome if you don’t pay heed to the details.

If you commit mistakes in filing your taxes, you may end up losing refund, paying penalty and may even face prosecution.

As you are ready to file your Income tax return for the Assessment Year 2017-18, avoid these tax bloopers to prevent any unnecessary trouble.

Failing to provide Aadhaar number

If you are delaying your return filing beyond 30th June 2017 and you are eligible to get an Aadhaar or already have an Aadhaar allotted in your name, don’t miss to quote that in your Tax Return. From 1st July 2017, it is mandatory to quote Aadhaar number or Enrolment ID in the tax returns by all eligible tax payers. Failing to do so will invalidate your return and other related consequences may fall.

Failing to File I-T Return

Don’t think that your responsibilities end once all your tax dues are clear. If your income exceeds Rs. 2.5 lakh for Financial Year 2016-17, you need to file an Income Tax Return. Remember that this income is calculated before accounting for all the deductions.

Filing Physical Return where e-Filing is required

The government gives you the option to either file your tax return physically or do it online. However, if your assessable income exceeds Rs. 5 lakh, it becomes mandatory for you to e-file your tax return. But if you are a senior citizen, you can still choose to file a physical return.

Not Studying Form 26AS

Your Form 26AS or Tax Credit Statement gives you all the important details of taxes you have paid. Don’t forget to check it before filing your tax return. It will help you in eliminating any errors in tax calculations so that you can file an accurate return.

Incorrect Personal Details

Imagine what will happen if your refund gets credited to another person’s bank account or your refund cheque gets delivered to a wrong address. Providing incorrect personal details in your ITR can create several issues like this. Therefore, you must avoid such silly errors and file carefully.

Excluding FD Interest from your Income

Interest income from your saving account is exempt up to Rs. 10,000 but interest income from your FD isn’t. Half knowledge is a dangerous thing which becomes evident when some people exclude FD interest from their taxable income. Remember that every single rupee earned in this case is chargeable to tax.

Under-reporting your Income

Remember that hiding your income to evade tax is a crime. If caught, you can end up paying a heavy penalty and even land in jail. These days, tax department is easily able to track your income through your PAN. Every large transaction is reported annually by companies, banks and other financial entities to the government. Therefore, you must disclose all your income, clear your tax dues and file tax returns on time. For example, if you have two house properties, you need to add rental income to your earnings even if you don’t have any. You must disclose income earned through Shares, Mutual Funds, Property Capital Gains, etc. If you have switched jobs multiple times in a year, you must bring your income from all the employers to light.

Failing to Report Exempt Income

There are several different types of incomes which are exempt from tax. E.g. if you have dividend income from stocks or interest income from savings bank account, you can save a good amount of money from tax net by notifying tax department about it in your ITR.

Using Wrong ITR

I-T department has prescribed different ITR forms for different type of tax payers. You need to choose your ITR carefully before filing your taxes or else tax department will reject it and ask you to file a revised return.

Not Verifying Tax Return

This is a very common mistake made by first-time tax filers. Such people think that their job is done once they have filed their taxes. They fail to verify their return and send necessary documents to the I-T department. If you e-file your taxes, you can either e-verify your taxes from I-T department’s e-filing portal or get physical verification done by sending a printed and signed copy of ITR-V to CPC-Bengaluru.

Not Revising Your Return

If you have made a mistake in reporting your income and savings during the year, you can still correct the return by filing a revised return. Till previous Financial Year, the government allowed tax filers to revise return within two years from the end of the Financial Year for which the return was filed. However, from this Financial Year or F.Y. 2017-18, you will get only one year to revise your return from the end of relevant F.Y. So, if you find any mistakes from your end in your filed return then you should not wait for a notice from tax department before taking any action. Instead, you should immediately file a revised one.

Source : Zee news/6.5.2017

Earn more than 50 lakh, you should declare your income before 31st july.

If your income in the last financial year exceeded Rs 50 lakh, then beware, the Income Tax Department has a new rules which mandates you to declare your net worth — assets and liabilities’ details. The Central Board of Direct Taxes (CBDT) has come out with a new schedule called ‘Schedule AL’ which is now a part of the income tax returns’ forms that need to be filled by July 31.

Under the new rule, the assets have been classified into two categories – immovable and movable assets. You will have to declare your land/ building (including house property) under the ‘immovable assets’ column. ‘Movable assets’ will include cash in hand, vehicles (including your yacht, boats and aircraft), jewellery, bullion, and other valuable metals. Your liabilities, on the other hand, will include outstanding loans, if any.

Why the new rule?
The new rule is a part of the several efforts that the government is making to crack down on unaccounted income and assets in the country. The new requirement has been especially added in the aftermath of the abolition of the wealth tax which exempts individual taxpayers from filing the details of their wealth. Your disclosure will help the government gather information of various high networth individuals in the country, and keep you out of the spotlight for the tax department.

It’s important to be extremely careful while disclosing the assets and liabilities to avoid any penalties or worse, an income tax notice in the future. Declaring your assets and liabilities will also have you on the right side of law.

However, only time will tell how many people actually disclose their assets despite the new rule, apart from the salaried class taxpayers and working professionals. A salaried person, it is observed, usually doesn’t have much to hide, and pays more taxes than any other class of taxpayers. There are approximately 1.5 lakh individuals and HUFs whose income exceeds Rs 50 lakh per annum. We will have to wait any watch how many of them come clean on their wealth.

Difference between ITR -4 and ITR-4S

Several professional & business owners are unsure about whether they should file ITR 4 or ITR-4S. Read on to find out which one applies to you.

Generally speaking ITR-4 can be filled by anyone who is running a business or undertaking a profession. There is no minimum income you should be earning to file this return. Say if you are a shopkeeper, construction contractor, a doctor, a tutor, a retailer, a wholesaler, an insurance agent, interior decorator or fashion designer, you can file ITR-4. Absolutely all businesses are eligible to file ITR-4.
ITR-4 is a detailed form ITR which broadly requires the following details of ‘Income from Business’ head –

o Part A Part A-GEN: General information and Nature of Business
o Part A-BS: Balance Sheet as of March 31, 2015 of the Business or Profession
o Part A-P&L: Profit and Loss details for the Financial Year 2014-15
o Part A-OI: Other Information (optional in cases where audit is not
mandatory)
o Part A-QD: Quantitative Details (optional in cases where audit is not
mandatory)
o Part B: Outline of the total income and tax computation
Besides this there are about 35 other schedules in ITR-4 where
additional information is asked for.

In summary, everyone who runs a business or carries on profession, however big or small, can fileITR-4.

Then who can file ITR-4S?
ITR-4S is a special case ITR, applicable for businesses where income is calculated on ‘presumptive method’. As per presumptive method – net income is estimated to be 8% of gross receipts (Section 44AD of the income tax act) or Rs 7,500 per month for each vehicle where the tax payer is plies, leases or hires trucks (Section 44AE of the income tax act). This is a special scheme of income tax department – those who opt for this scheme – don’t have to maintain accounting records.
The ITR-4S is a very simple return, just about 3 pages and that’s all the income tax department wants to know.

Broadly the ITR-4S asks for –
Gross Turnover or Gross Receipts
Total presumptive income
Total Sundry Debtors
Total Sundry Creditors
Total Stock-in-trade
Cash Balance

However there are 2 situations where ITR-4S cannot be filed, and ITR-4 has to be filed in these cases –

• Situation 1 – Where Gross receipts or turnover of a business or profession
is more than Rs 1 crore

• Situation 2 – If you fall in any of the below mentioned case you cannot file
ITR-4S

o Income from commission or brokerage
o Income from Agency business
o Income from Profession – those who are carrying on profession of legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, an authorized representative, film artist, company secretary and information technology. Authorized representative means – any person, who represents someone, for a fee or remuneration, before any Tribunal or authority under law. Film Artist includes a producer, actor, cameraman, director, music director, art director, dance director, editor, singer, lyricist, story writer, screenplay writer, dialogue writer, dress designer – basically any person who is involved in his professional capacity in the production of a film.

o Own more than one house property
o Earned Speculative income like winning from lotteries, horse races
o Agriculture income or exempt income more than Rs 5,000
o Have Capital gains
o Losses to be carried forward
o Holds any assets outside the country or has any financial interest in any
o foreign entity
o Is a signing authority in any bank account located outside India
o Any resident having income from any source outside India
o Claimed relief under Section 90 or 91

Let’s take some examples –

Case 1 – Atul runs a cloth retail shop and has opted for the presumptive income scheme.
Atul can choose to file ITR-4 or ITR -4S (provided is gross turnover is less than Rs 1crore).

Case 2 – Neha is an interior decorator and wants to know which ITR form should she file.
Neha cannot file ITR-4S, her profession is listed as non-eligible to file ITR-4S. Neha has to file ITR-4.

Case 3 – Deepika had opted for presumptive income for FY 2013-14. She runs a wholesale business and her turnover for FY 2014-15 was Rs 1.20 crores.
Since Deepika’s turnover exceeds Rs 1 crore, for financial year 2014-15 she will have to file ITR-4 as ITR-4S is not applicable in cases where turnover exceeds Rs 1crore.

Case 4 – Rahul is an insurance agent and his income was Rs 18lakhs in financial year 2014-15, he wants to file ITR-4S.
Those running insurance commission business cannot file ITR-4S. Therefore Rahul has to file ITR -4 for financial year 2014-15.

Case 5 – Shashank is a practicing heart specialist and his turnover for financial year 2014-15 is Rs 55lakhs. Shashank wants to file ITR-4S.
Doctors are not eligible to file ITR-4S. Even though Shashank’s income is less than Rs 1crore, he has to file ITR-4.

Case 6 – Prashant carries on 2 businesses . He has a manufacturing business with a turnover of Rs 1.4crores and another business of truck hiring and leasing, which is eligible for presumptive income as per section 44 AD. Prashant wants to know which ITR to file.
Even though Prashant runs a business which is eligible under section 44AD, he shall have to file ITR-4. Return of income must include income form all sources and given Prashant’s first business, ITR-4 shall be applicable for filing his consolidated income details.

Case 7 – Ashish is in the business of plying, hiring , or leasing goods carriage. In the financial year 2014-15 he owned 13 lorries.
Presumptive method of taxation under section 44AE is applicable only in cases where not more than 10 trucks are owned. Therefore, Since Ashish owns more than 10 trucks he has to file ITR-4.

Case 8 – Vijay is in the business of plying, hiring, leasing goods carriage and owns 5 goods carriage during the year but Vijay chooses not to opt for 44 AE scheme and want to declare income lower than the income estimated under section 44AE.
Vijay can declare income lower than what is calculated under section 44AE, however he shall have to maintain books of accounts as prescribed and will have to file ITR-4 for his income.

Steps to be taken in Filing Income tax returns

One needs to check if the tax return was filed accurately. There are certain aspects which, if taken care of, can avoid or reduce instances of tax demands/ notices being issued.

Form 26AS is a one-stop database for details of all taxes deducted at source on your income, taxes paid by you (either as advance tax or as self-assessment tax) etc. It would also contain details of income paid to you on which taxes have been deducted. In case there is a mismatch between the data in the Form 26AS and your Income tax return, there is every likelihood that a notice issued to you for the shortfall, if any.

It is important that appropriate form is used for filing your tax return. ITR-1 is to be used only if you have income from salary, one house property and other sources. In case you have income from more than one house property or loss to be carried forward etc., ITR-2A may be used. Further, if there are capital gains, foreign assets to be reported or tax treaty relief to be claimed, ITR-2 may be used.

An additional reporting requirement introduced in this year’s tax return forms is the mandatory disclosure of assets and liabilities held in India at the end of the financial year, if total income exceeds Rs 50 lakh. The following assets are required to be reported at cost in the tax return along with any liability (loan) incurred in relation to them:

Land and building Cash in hand Jewellery and bullions Vehicles, yachts, boats and aircrafts.

In case the asset was transferred to you by way of gift or inheritance, then the cost at which the previous owner acquired the asset would have to be reported.

If foreign assets like bank accounts are held abroad, you are required to file your tax return to report details of the same, even if there were no transactions in that account. Also, if you have received shares from your employer’s foreign parent company, the same will also have to be reported.

Since the last year, details of all savings and current bank accounts are required to be furnished, including ones closed during the year.

Previously, only one bank account was required to be reported for the tax refund to be credited. Also, do remember to report your savings bank account interest. A deduction of up to Rs 10,000 is available for the same.

After e-filing, in case the return is not digitally signed, do verify your tax return within 120 days of e-filing by sending signed ITR-V to the Centralised Processing Centre of Income tax department or by online validation of an Electronic Verification Code.

Failing this, your tax return would not be processed and will be an invalid return.
While the list of dos and don’ts for tax return filing can be endless, the above are some key points that can help avoid errors and resultant tax notices.

Steps for error free filing of online Income Tax Return

First collect and prepare all documents and details – Here is the list of documents one should be ready with before filing his tax returns.

1. Collect your Form 16 / Form 12BA from your current employer or previous employer in case of change of employment if any
2. TDS certificates in form 16A for self employed & professional:
3. Get Updated Bank statements of all the accounts;
4. Statement of transaction of Mutual Funds, Shares & Stocks and Property if any;
5. Full details of the Loan of House or Vehicle if any;
6. Proof of investments and expenses to claim deduction;
7. Advance tax challan and self assessment tax challan, if any;
8. Donation receipt, if any, to claim tax benefit;
9. Rental Income receipt, if any.

Next, Do a Tax Computation and pay due taxes, if any – ideally this exercise should be undertaken in the month of March, to know exact amount of total income and tax liability thereon. As in the month of March, as you are aware of the TDS deducted by the employer during the financial year and if there is short deduction of TDS then the additional tax liability should be paid within the financial year to avoid penal interest.

Third, please check tax credits in Form 26AS statement on the income tax website, before you upload your tax returns- as it ensures correct credit for the tax paid or deducted. Form 26AS contains details of TDS, Advance tax /self assessment tax /regular assessment tax and one should always check Form 26AS, infact periodically as it helps to take corrective measures if needed.

Select appropriate Income Tax Return Form applicable to you– based on nature of income. There are basically seven kinds of tax return filing forms released by the department based on different nature of income for different assessees.

Fill your Income Tax return Form Properly- providing all the details of income and investments. Missing tax investment deductions can make you pay unnecessary taxes. Claiming correct deductions ensures lesser amount of taxes.

In addition to above, one needs to provide all other basic details correctly as we have experienced from our experience that taxpayer’s often ignore to verify correctness of their basic details which leads to incorrect processing of return and delay in refund. Here are the some of basic details which one should verify before filing tax returns to ensure seamless processing of returns at the Income Tax Department and speedy issue of refunds.

1. Personal details like address, PAN number, date of birth;
2. Jurisdiction of Assessing Office;
3. Updated e-mail address as communications are now done via mail by the income tax department;
4. Bank account details with account number and MICR Code;
5. Validated TAN number of the Employer.

Generate xml and upload – After filling all the details in Income tax return Form, generate xml file, register and create a user Id & password in the Income tax website then Login and Upload the xml file generated. Upon, successful uploading of the xml file, Income Tax Return Verification Form (ITR V) will be generated and if you have filed the Income Tax Return with digital signature then ITR Acknowledgement will be generated.

The process doesn’t end here, after that ITR V Form needs to be printed, signed and posted to Centralised Processing Centre at Bangalore within 120 days of uploading the same electronically. But, in case the ITR was filed with digital signature then there is no need to submit ITR Acknowledgement to the CPC, Bangalore.

New functionality to taxpayers to secure their E-filing account

The Income Tax Department has from time to time issued advisories regarding the need to avoid phishing emails and to carefully protect the passwords, OTPs and not share them with others.

In order to ensure that taxpayers are able to secure their E-filing account against any fraudulent attempts, the Income Tax Department has introduced a new facility called the E-filing Vault. In order to use this facility, taxpayers can log in to their E-filing Account and under their profile page select E-filing Vault – higher security.

Taxpayers can then select to login with any one or multiple options of the higher security methods namely – using Aadhaar linkage to generate OTP, Login through Net-Banking or Login using Digital Signature Certificate (DSC). Once this has been done, any future attempt to login will require the additional check of OTP using Aadhaar or the taxpayers will have to login using net banking or login using DSC. By using this facility, taxpayers can prevent anyone from logging in even if in the past they shared the user id and password. The dual factor authorization ensures higher degree of security compared to the simple User id and Password.

Similarly, taxpayers can also select how their password can be reset. Once the taxpayer has selected reset password using any one or multiple options of the higher security methods namely – using Aadhaar linkage to generate OTP, Login through Net-Banking or Login using Digital Signature Certificate (DSC), then no other person will be able to reset taxpayer’s password even if the secret answer or E-filing OTP etc is known.

Additional EVC options using ATM, Bank Account Validation or Demat Account Validations are shortly going to be introduced and these options will also be available for the higher level of security for login as well as resetting of password.

Income Tax Department strongly advises all taxpayers to use a strong password (combination of at least one uppercase, one special character and one numeral) and select the E-filing Vault option to add an additional layer of security to the their E-filing Account to login and resetting of password .