Things to Take Special Care of When Filing Your Income Tax Returns This Year

The IT department has also launched a new e-filing portal aimed at providing taxpayers the convenience and a modern, seamless experience to file tax.

Some of the unique features of the portal are:

• Integrated immediate processing of ITRs to issue quick refunds

• Free of cost ITR preparation software will be available online and offline with interactive questions to help you taxpayers fill the ITR form even if you have no tax knowledge, with prefilling for minimizing data entry effort

• A new call centre to assist you, the taxpayer, with immediate answers to your tax queries with FAQs, Tutorials, Videos and chatbot/live agent

• New payment options using net banking, UPI, Credit Card, and RTGS/NEFT from any account of the taxpayer's in any bank, for easy payment of taxes

• A new mobile app will be launched to help you in availing various tax-related services on-the-go

Here are some other aspects to keep in mind while filing your income tax returns this year:

1) Link Aadhar with PAN

The last date to link Aadhar with your PAN is June 30, 2021; after that, all PANs not linked with Aadhar will be deactivated. If you fail to link the two, your ITR will not be processed. You can link Aadhar with PAN by visiting the Income Tax e-filing portal or by using the SMS service.

2) New and old tax regime

The optional new tax regime came into effect from financial year 2020-21. Taxpayers now have the option to either remain in the old tax regime or opt for the new lower tax regime. If you opt for the new lower tax regime, you will have to forgo some of the common and popular deductions/ exemptions such as Leave Travel allowance (LTA), House Rent Allowance (HRA), and deduction under chapter VI-A (80C, 80D, 80E, 80G, etc.), standard deduction, deduction under Section 24(b), etc.

Ideally, you should choose the tax regime at the beginning of the financial year after careful evaluation of your tax liability under old and new tax regime and intimate your employer about it.

However, if you opted for the old tax regime with employer for TDS on salary, but at the time of filing of ITR if you want to switch to the new tax regime, you can do so filling the new form, i.e Form 10-IE.

Salaried individuals can choose to change the tax regime for every financial year from 2020-21 onwards. However, individuals having income from business have only a one-time option to switch back to the old regime. They do not have the option to switch back to the new regime once they have chosen the old regime.

3) Use the correct form

The government notifies ITR forms that must be filed at the beginning of the financial year. This year no significant changes have been made to the ITR forms in comparison to last year's forms.

Carefully choose the right ITR form based on your income and assessee type (resident, non-resident, individual, business owner, etc.).

This year ITR form 1 (Sahaj) cannot be filed by:

1) A person whose tax deducted at source (TDS) has been deducted under Section 194N for cash withdrawal (in excess of Rs 1 crore for those who regularly file their ITR and for withdrawal in excess of Rs 20 lakh for those who have not filed income tax return for three years immediately preceding the year) from bank, co-operative bank, or post office.

2) Employees who have deferred tax on employee stock options (ESOPs) received from the employer.

3) Those who have invested in unlisted equity shares.

4) An Individual who is a director in a company.

In ITR for AY 2021-22, there is an addition of section 115BAC. If you wish to opt for the new tax regime under section 115BAC, select Yes in the new ITR form, else select No.

4) Verify pre-filled details

In order to ease compliance for the taxpayer, details of salary income, tax payments, TDS, etc. come pre-filled in income tax returns. To further ease the filing of returns, the finance minister has announced that details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled.

Taxpayers should verify the pre-filled data carefully and correct any mismatch before submitting it. You can verify details with help of relevant documents such as Form 26AS, TDS certificates, proof of investments, rental agreement, proof of tax paid, etc. Further, ensure that you disclose each source of income (including exempt income), as well as assets and liabilities.

5) Dividend income is taxable

Dividend income is now taxable in the hands of investors as per income tax rate applicable to the taxpayer. Accordingly, TDS at the rate of 10% will be deducted by the company/mutual fund at the time of payment of dividend if it exceeds Rs 5,000 in a financial year. You can find details of the dividend income and the tax deducted in the new format of Form 26AS.

However, if you do not have a taxable income, you can submit Form 15G (or 15H for senior citizens) to claim tax refund on TDS charged on dividend income.

Finally, ensure that you file your ITR before the due date to avoid the last minute rush. These are the benefits of filing ITR before the due date:

• You get enough time to be organised and correct any discrepancies

• You can avoid the glitches that the servers usually face when the deadline is nearing

• You will be able to avoid errors, undue stress, and penalty

• You will have plenty of time to plan your investments

• You will be able to receive refunds faster (if any)

Start tax planning at the beginning of the financial year to make the best use of various options and provisions available to taxpayers. Pay your taxes on time and discharge your constitutional and moral duty and be a law-abiding citizen.

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Research Analyst

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