All year, the income tax department introduces certain variations in the tax-filing process or the tax forms. A taxpayer must know the changes made in the process to file an error-free income tax return (ITR). The department has notified the ITR forms for AY22 and has extended the ITR filing deadline till 30th September. Now we will tell you few things that you should keep in mind while filing ITR this year.
1. Difference between New and Old tax regime
The government had introduced a new optional tax regime in Budget 2020. From Financial Year (FY) 2021, individual taxpayers have the option to choose between two tax regimes. The new tax regime consists of offering to tax at a lower slab rate but the taxpayer will have to let go of various deductions and exemptions available under the old regime. The taxpayer had to choose the regime at the beginning of the year. Although, if you are having a problem making the planned investments or expenses against which you could claim the tax deduction under the old regime, you can switch to the new one if it is leading to lower tax liability for you. Abhishek Soni, co-founder of Tax2win.in which is an income tax-filing portal said that the Business owners should elect the correct regime thoughtfully because once selected, it can be changed only once. Although, salaried individuals with income from salary, house property and other income can change it every year. One should calculate tax under both regimes after considering applicable provisions and then decide.
2. Extension of dates along with no tax relief
As the last date for filing ITR has been extended till 30th September, it doesn’t provide any relief from the tax liability. If your advance tax is pending and you may have to pay penal interest. Therefore, it will be better to pay tax and file ITR as soon as possible. The founder of RSM India, Suresh Surana said that the CBDT has provided that relaxation concerning interest under Section 234A only where the self-assessment tax liability does not exceed Rs 1,00,000 after providing for TDS and advance tax, etc. Thus, except where the self-assessment tax liability exceeds Rs one lakh along with no relief as per Section 234A would be provided to the taxpayer assessee.” Under Section 234A, interest at the rate of one per cent is charged monthly for any delay in filing in ITR. Suresh Surana added that in future the taxpayers’ assessee might be subjected to interest under Section 234B and 234C irrespective of the extension of the due date. In Section 234B, interest is applicable only if the taxpayer has not deposited advance tax or if the advance tax deposited is less than 90% of the total tax liability. Whereas, under Section 234C, penal interest will be applicable if the taxpayer has not deposited advance tax as per the prescribed quarterly instalments. Also, the senior citizens who have no business income are exempted to pay advance tax.
3. New variations in tax forms
The tax department’s role is to notify tax forms every year after incorporating any changes. It is imperative to go through the changes in order to pick the right ITR form. This year, there are certain new variations implemented in the eligibility criteria of ITR 1, which is generally used by salaried taxpayers. The ITR 1 can’t be filed by a person this year whose tax deducted source (TDS) has been deducted for cash withdrawal under Section 194N or those employees who have deferred tax on employee stock options (ESOPs) received from the employer. While choosing the form, do keep these changes in mind.
4. Unclaimed deductions
If by chance you forgot to submit the proof of investments such as life insurance or health insurance premium with your employer and tax has already been deducted, no need to worry because you can claim these deductions at the time of filing ITR and claim the refund of the tax paid. Also, do have a copy. It is important that you verify details such as dividend received, capital gains on shares and mutual funds along with the documents you have. Therefore, it will be helpful to collect documents such as Form 16, Form 26AS and bank statements before you start filing your ITR. Vivek Jalan, a consulting firm of Tax Connect Advisory Services LLP, said that the assessee is advised to wait till 15 July as the TDS deducted or TCS (Tax Collected Source) paid on their behalf may get updated in their Form 26AS by that date. The deadline for filing TDS and TCS returns has been extended till 30 June. The tax filing process will not be completed until you verify the ITR. It can be done online or by mailing the duly signed ITR-V by post.