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Why Should You File Income Tax Return on Time?

The tax returns season is underway. You must take all steps to ensure your return filing is error-free. For this, it is important to file your returns punctually by the July 31 deadline and to keep yourself updated about any changes in the tax filing norms.

If you wait till the last minute to file your returns, you may commit mistakes in a hurry and will have to file a revised return by March 31, 2019. From assessment year 2018-19, if you file your income tax return (ITR) after the due date, you may have to pay a penalty up to Rs. 5,000 if you file by December 31 and Rs. 10,000 thereafter. For those whose income is under Rs. 5 lakhs, the penalty is Rs. 1,000.

Take a look at some of the important changes to ensure an error-free filing well within the July 31 deadline:

  • Income tax slab rates have changed for AY 2018-19. For individuals whose taxable income is between Rs. 2.5 lakhs and Rs. 5 lakhs, a rate of 5 percent would be applied. The tax slab of 20 percent remains the same for individuals earning Rs. 5 lakhs to Rs 10 lakhs, and 30 percent for income above Rs. 10 lakhs.
  • If you own more than one home, then till AY 2017-18 the entire interest paid on the home loan was allowed as deduction under Section 24B. But now it has been restricted to Rs. 2 lakhs in a financial year. Earlier, the complete loss from house property was allowed to be set-off without a ceiling, but it is now restricted to Rs. 2 lakhs in a financial year and the remaining loss can be carried forward for the next 8 years.
  • Earlier, the holding period to claim long-term capital gain tax on immovable property was 3 years, but from AY 18-19 the holding period has been reduced to 2 years.
  • The Base year to calculate the indexation for ascertaining LTCG was 1981-82 earlier. It is 2001-02 from this Assessment year.
  • Earlier, there was no surcharge on an individual’s income, but from this year a 10 percent surcharge will be applicable if the total income exceeds Rs. 50 lakhs up to Rs. 1 crore. If the income exceeds Rs. 1 crore, a surcharge of 15 percent will be applicable.
  • Section 87A earlier provided a rebate up to Rs. 5,000, but the same has been slashed to Rs. 2,500.
  • Changes in ITR form Sahaj or ITR-1 form will now require additional details related to salary break-up. It would need details of perquisites, allowances, et al. It would also require detail of income from the property including rental income, tax given to local authority, etc.
  • In the new ITR form, you need to mention the details of exemption from capital gain separately. For each section such as Sec 54, 54 B, 54 EC, 54 GB, etc. you have to mention the details in the relevant column.
  • ITR 4 has also changed, as it would now need additional details such as secured/unsecured loan details, fixed assets, capital account, etc.
  • GST details are required while filing ITR starting this year, you have to specify the exact turnover details mentioned while filing Goods & Services Tax. This can be cross-checked by the Income Tax Department. You also need to mention the GST detail in ITR.

Tips for an error-free e-filing:

  • Depending on your mode of filing returns - either through a private tax filing portal or through the government one, you should be aware of the form you need to fill. In case it is done through a private portal, the correct form will be chosen for you. If you file via the government website, you will have to manually choose it.
  • Since the IT Department has introduced 7 new forms this year, it is wise to have some time in hand to pick the correct form and avoid mistakes.
  • Keep all important documents handy and do your calculations beforehand while filing returns to save time and to keep errors away
  • Claim all tax benefits and deductions properly -even the ones you forgot to mention in your tax declaration
  • Take note of important details like interest earned from recurring deposits and fixed deposits, which are fully taxable at the applicable slab rates. Interest earned up to Rs. 10,000 from savings bank account is exempt under Section 80TTA.
  • While filing your returns, you would also require time to verify your tax deducted at source details in Form 26AS. Any mismatch should be brought to the notice of your employer. Again, you need time to make rectifications, therefore plan ahead to avoid last-minute rush which can cause errors.

By being aware about the changes and updates in the tax filing norms discussed above, you can avoid the last-minute hassle and have an error-free filing process.

Any assistance or guidance needed in relation to Income Tax E-Filing or any other matters, please reach out to us at contact@msassociates.pro