What to keep in mind when filing the financial year 21 IT declaration

The Income Tax Service (ITD) launched a new electronic filing portal (www. Incometax.gov.in) on June 7, as part of the CPC 2.0 project. It aims to provide better services to taxpayers and speed up the processing of tax returns. In addition, ITD will soon launch a mobile application, which will have all the features available on the new portal. Every taxpayer will experience the new portal when filing the tax return (ITR) for fiscal year 2020-21 (FY21), the deadline for which has been extended until September 30.

In this context, let’s understand some important aspects related to filing income tax returns.

Key changes: ITD has introduced a new utility named JSON for filing tax return forms for FY21. Currently only ITR 1, 2 and 4 tax return forms have been released. These forms can import and pre-populate data from the e-filing portal. The pre-populated data includes personal data, salary income, dividend income, interest income, capital gains and all the information available in the 26AS form.

From fiscal year 21, a new concessional tax regime was introduced. As a result, taxpayers will have the option of choosing between the old and the new tax regime when filing the tax return. If you are an individual employee and want to change the option communicated to the employer, this can be done at the tax return stage.

Action plan: Gather all the relevant information and documents required for filing the income tax return to avoid any false or inaccurate income reporting. In addition, it should be ensured that all sources of income, including exempt income such as PPF, are duly declared in the tax return. Before completing the income tax return, reconcile all sources of income with the data declared in the income tax return form. This will help in the flawless processing of the tax return.

Evaluate taxes payable in advance and make necessary tax payments on time to avoid levying applicable interest on delayed tax payments.

Depending on the sources of income, one should choose the correct tax return form when filing the tax return. If the taxpayer uses the wrong tax return form, they may receive a faulty return notice from the ITD. As an example, if an employee has capital gains or foreign assets / income, RTI 2 must be filed.

When to file the income tax return: According to the Income Tax Act, an individual taxpayer whose business or professional income exceeds the prescribed threshold must have the books audited and file tax returns by November 30. However, persons with no obligation to have the books audited must file a tax return before the specified due date, i.e. July 31 of the following fiscal year. This deadline has been extended to September 30 for fiscal year 21.

If you miss these extended deadlines, there is an option to file a late return until December 31, which was recently extended until January 31, 2022. However, a late fee of 5,000 is applicable on the filing of such a late declaration.

The Central Commission for Direct Taxes (CBDT) clarified that the due date for filing the tax return does not exempt the taxpayer from paying tax before the date of filing the original return. Any delay in paying taxes beyond the original RTI filing date will result in additional interest.

However, the CBDT has granted relief from the interest levy in the following cases: (a) If the self-assessment tax (SA) payable does not exceed 1 lakh, and (b) for elderly residents who do not exercise a business or profession, SA tax paid up to the initial due date for filing the RTI will be treated as withholding tax and no interest will be charged on this amount for the late deposit to return.

ITD makes continuous efforts to improve the taxpayer experience. It is now the responsibility of taxpayers to file the ITR on time and pay the taxes owed.

The new e-filing portal faced initial problems. However, it is expected that a state-of-the-art interface will be available to taxpayers when they start filing their tax returns.

Amarpal Chadha is a tax partner and mobility leader in India, EY India. Alfred Rodrigues, Tax Director – Personal Advisory Services, EY India, contributed to this article. The opinions expressed are personal.

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