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If you are yet to file your income tax return (ITR), you are cutting it rather close. The tax filing deadline for the assessment year 2021-22, which has been revised twice, is 31 December. As of 27 December, 46.7 million ITRs for the current assessment year have been filed. Just three days before the deadline, this is far less than the total 73.8 million ITRs that were filed for assessment year 2020-21.
Late-minute tax filing runs the risk of incorrect filing or defaulting on deadline. For one, you may not gather all documents on time and miss reporting incomes. Or, on finding a discrepancy between Form 26AS and TDS forms or between pre-filled information and the forms available with you, there might not be enough time left to seek a clarification from the income tax (IT) department before the deadline.
The penalty for filing a tax return after the deadline is ₹5,000 for taxpayers with total income above ₹5 lakh and ₹1,000 for those with an income below this limit. Not to forget the 1% monthly interest that needs to be paid on tax liability above ₹1 lakh after deducting TDS and advance tax paid.
To take the stress out of last-minute tax filing, Mint lists out the major changes in tax filing introduced for the current year and the important aspects to watch out for.
Dividend income: Until last year, only dividend income above ₹10 lakh had to be declared and was taxed at 10%. This year onwards, this threshold is removed and dividend income will be entirely taxed at slab rates.
Since all dividend income will now be taxable, the column for disclosure of dividend income under the exempt income schedule has been removed. Quarterly breakup of dividend income is to be given under ‘income from other sources’ head.
Deductions available under new tax regime: This is the first assessment year where taxpayers have to choose between new and old tax regimes. The new regime forgoes 70 tax deductions and lowers tax liability for incomes between ₹5 lakh and ₹12.5 lakh. However, the new regime still allows certain tax deductions.
One, you can claim deduction on the entire interest amount paid on a home loan taken for a rented-out property, said Karan Batra, founder, charteredclub.com. The new regime does away with tax benefits on a home loan on a self-occupied property.
Two, deduction on employer’s contribution in National Pension Scheme (NPS) under Section 80CCD (1B) is available.
Three, the new regime has foregone deduction on contributions made in PPF and Sukanya Samriddhi Yojana, but the maturity proceeds and accumulated interest from the two options continue to be tax exempt.
It should be noted that if a taxpayer with income from business or profession (includes freelancers) opts for the new tax regime, she will have the option to switch back to the old regime only once in her life. Once back to the old tax regime, she cannot opt for the new regime again. On the other hand, salaried individuals and pensioners with no business income can switch between the two regimes every assessment year. Kumar said taxpayers opting for the new regime should file Form 10-IE.
Introduced this year, the Annual Information Statement (AIS) contains details of all financial transactions related to investments, income and even expenditures done in a financial year. It is advised to match information available in AIS with the TDS certificates, investment statements and bank statements available with you before filing tax returns as any mismatch will be flagged by the tax department. Any error in the AIS should be reported to the tax department.
Given that taxpayers have only a few days before the deadline, getting resolution on errors in AIS may happen after the deadline.
In this case, the taxpayer should not wait for the resolution and file the tax return before the due date, said Ritesh Kumar, Partner, IndusLaw. The taxpayer should file ITR within the prescribed deadline, which will allow them to revise the tax return in a scenario where the resolution asks for a revised tax return.
If the taxpayer thinks the information mentioned in AIS is not correct, then she may report the correct data in the ITR since there are high chances of error or mistake being rectified subsequently on a resolution of the request. As there is sufficient time for information in AIS to be rectified before the summary assessment, it is unlikely that summary assessment may be made without considering the rectified data in AIS. In any case, an application for rectification of any order may still be made by the taxpayer thereafter.
In case the information is not corrected in the AIS, then mismatch may be flagged by the income tax department and the taxpayer should maintain documentation supporting the information furnished in the income tax return.
Source : Livemint