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Filing tax returns?

A step-by-step guide
Sunil Dhawan, Outlook Money


t's that time of the year again. You knew all along that it would come, whether you ignored or waited for it. The pages of the calendar have turned and you can hear colleagues waking up to it. And you know you can't run away from it any more. We are talking about 31 July, the day we are reminded of our bondage, the price we have to pay for many of the good things in our life. This happens to be the last day for filing income tax returns for all salaried Indians, be they resident or nonresident. Of course, you must have done everything legally possible to maximise your freedom from this bondage called tax. But then, the law permits you only that much. The rest, as they say, is illegal. You might also have wondered about the word return being used for an outgo. Maybe it's because governments always want citizens to see things from their point of view, perhaps for the larger good. Filing of tax is compulsory for everyone whose gross total income - the income under the five heads (salary, business, capital gains, house property or other sources) before allowing for any deductions such as insurance premium - exceeds the basic exemption limit. For financial year 2007-08 (assessment year 2008-09), this limit was Rs 145,000 for women below 65 years of age, Rs 195,000 for senior citizens (above age 65 years) and Rs 110,000 for any other individual. It is compulsory for every person exceeding these limits to file the return before the prescribed date, even if their employer has taken care of their tax liabilities by reducing their salaries by the necessary amounts before paying the rest to them. Paid this way, it is known as tax deducted at source or TDS. Filing of the form There are two income tax return forms, ITR-1 and ITR-2, for salaried individuals. Your sources of income (they will fall under one or more of the five sources mentioned earlier) will decide your form. You will have to submit the filled form to the tax authorities and get an acknowledgement from them.

Income source decides return form ITR-1: Income from salary, pension and interest earned in a financial year ITR-2: Capital gains, income/loss from house property and income from any other source

Use ITR-1 to file your tax return if your income is from salary, pension or interest. In case of any capital gains, income or loss from house property and income from any other source, you will have to use ITR-2. You can go to to download these forms.

You will find ITR-1 relatively simple to fill up. A prerequisite for the exercise is Form 16, the certificate that comes from the employer showing the TDS from the income chargeable under the head salary. ITR-1 is almost a replica of Form 16. All you have to do is pick the numbers from Form 16 and put them in the ITR form. Apart from salary income, there is an important component of income that many taxpayers ignore while filing their returns. It is the interest income earned from the funds lying in savings accounts in banks. Disclosing that, however small it may be, is mandatory. You just have to add the total interest credited to your bank account in the last financial year. Scrutinise your income tax return to ensure that no taxable income is undisclosed. After you file your return, the tax authorities will hand you an acknowledgment. That's it, you are through with the filing of returns.

he would suggest some tax saving ways to you for the future. have made any capital gains. The second. as a salaried individual. the acknowledgement. or you may get a chartered accountant or a tax return preparer to do it for you.000. if any. you will have to input the details of Form 16 in the software of the website. is fast catching up. you should first get hold of Form 280. Some sites also have provision for online payment of tax. which would automatically generate an electronic return in XML format. This form is filled in the same way as ITR-1. In both cases. To e-file. but optional for salaried individuals still. check if you would be getting a refund from the IT Department or have to pay tax. from house property and other sources. This format helps in sharing of structured data across different information systems. . including the private and government websites meant for filing tax returns. In case DS is used. What is especially important is that the online method reduces or even eliminates the interface between the tax assessee and tax officials. A PDF file of the relevant ITR form is also created along with the XML . One good thing about filing through a CA is that it would bring down the margin of error to nil. emailed to you will have to be submitted at an ITO within 15 days of downloading it. Use of a digital signature will render the efiling process complete without involving paperwork and visits to the ITO. Before you start filing the return. which often gets reflected in the quality of his practice. In case of the latter. you will have to fill in income. it may well become compulsory for individuals with a certain level of income in times to come. A DS can be acquired from any of the agencies authorised by the government for the job. The digital method is compulsory for companies. it may not be a bad idea to familiarise yourself with this process. These will come in handy if you are asked to authenticate the maths. depending on the acumen of the may either submit the ITR form at the nearest income tax office after filling it up yourself. How to file The actual filing of return can be done either by using the traditional paper form or electronically. the acknowledgement will be emailed to you. No documents or investment proofs need to be attached with the form. Typically. You can download this ITR form. depending on the complexities involved.the IT Department site. Doing it online E-filing is done through sites authorised by the IT Department to file taxes on your behalf. fill it up and deposit it any bank along with the tax payable in cash or cheque. even before starting the filing process. So. If you upload the file on the tax department's site without the DS.You will need to fill up ITR-2 if you. it can also be done from anywhere. Try to visit the ITO well before the last date for filing return as crowds increase as 31 July draws near. known as e-filing. E-filing is not just convenient and saves You can also pay tax through Internet banking. but remember to bring photocopies or originals with you to the ITO. submit it at the ITO and get an acknowledgement Save the XML file to your desktop and then upload it on incometaxindiaefiling. over the Internet. you will get a receipt number which has to be quoted in the ITR form Doing it offline There are two options . Also. called ITR-V. The fee of a CA would depend on your income slab and the number of income sources. it would range from Rs 300 to Rs 2. However. In addition. You may also take help from the public relations officer of the ITO to fill the form.

With Taxsmile. Penalty may also have to be paid A tax that governments impose on financial income generated by all entities within the jurisdiction of the government. Taxspanner uploads the taxpayer's file directly and emails ITR-V to him. a penalty of Rs 5. check if you can pay it through the site. Get clarity on the cost and features offered. download the relevant form from it. Taxshax gets most of the figures filled up in a single page. A DS from Taxspanner.incometaxindiaefiling. .jsp . email the tax site to clear them. Your DS comes with a validity period. attach the required documents. If you have any specific doubts concerning the filing process.000 is levied. but it is still out of reach for many of the 40 million taxpayers.Online sites Among the major sites offering e-filing facilities are Taxspanner. is valid for two years. E-filing without the DS is almost the same as filing returns offline. such as your identity and address proofs. This site offers a deal in which you can file returns for three years at a cost of Rs 250 a year. They empower with information and knowledge while taking the taxpayer step-by step through the entire process of tax filing. after which it has to be renewed. You can either take printouts of the relevant ITRs from these three sites and physically submit them or upload your XML file on the IT Department's site. A tax return can also be filed from the government site . make sure your are on the right side of 31 July. If tax is due. for example. businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. The major difference among them is on two counts . Should you go online? Internet accessibility is will be able to file the return in a few minutes from the comfort of your home or office. the digital signature way looks ideal . The three private tax sites get around this by making themselves friendly to taxpayers and not making filing of return dependent on an intricate understanding of the workings of tax laws. All the three sites are secure and easy to navigate. losses of earlier years brought forward or clubbed Taxsmile gives both these options. Apart from this. Taxsmile and Taxshax. Stick to the deadline Whether you are going offline or online. They will then forward it to the ITO.the number of income sources covered and the process. To get your DS from a tax site.meant for it. and courier them to the address concerned. you can submit the forms at any of its offices spread over the The amount of this increase varies across tax sites. For those who have access to it and want to save time. A DS can be obtained from Taxsmile for Rs 500. The details of the return filed get saved in the database of these sites and can be accessed anytime in the future. Getting clarity is important as some sites do not include things like income from business or profession. The entire process of acquiring a DS may take around 15 days. Taxspanner has a step-by-step guide and takes one piece of information on one page. The advanced version might be required if you have income from other sources. Your PAN will work as the username for registering at this site. Use of DS raises the cost of e-filing. Tax laws can often seem like a cross between a Rubik's cube and Mutthiah Muralitharan's spin bowling. The tax sites also differ in the way they ask for information and allow you to input figures. If tax is due and return is not filed till 31 March of the following year. The minimum cost package would normally be only for salary income. you will have to pay for the basic package. By law.

Income tax is a key source of funds that the government uses to fund its activities and serve the public. income tax return .document giving the tax collector information about the taxpayer's tax liability. "his gross income was enough that he had to file a tax return" .