Income-tax returns is one of the most important documents for an earning person.
However, the filing can be a tedious task. There are numerous forms and documents that need to be filled and compiled to complete the procedure. These forms vary from person to person and here’s a look at who needs what:
Salaried: ITR-1 and ITR-2 forms are most relevant for salaried individuals. ITR-1 is applicable to those who have earned only salary and interest income during the financial year.
ITR-2 is applicable to those who have other types of non-business incomes, such as income from house property and capital gains.
Self-Employed: ITR 4 form is for self-employed individuals. Since the self employed earn their own income, which need not necessarily come to them periodically, he is liable to pay advance tax as he earns income. Thus, advance tax is payable on the basis of estimated income of the current financial year. Advance tax is payable only in cases where tax payable is in excess of Rs 5,000.
Advance tax: You have to pay 30 per cent of advance tax on or before September 15, 30 per cent on or before December 15, and the remaining 40 per cent on or before March 15.
NRIs: The income-tax return form for NRIs differs on the basis of the nature of their income. The relevant tax-return forms for NRIs are:
* ITR 1: NRIs with income from salary, pension or family pension.
* ITR 2: NRIs receiving income from other sources, excluding business or profession.
* ITR 2: NRIs who are partners in a domestic partnership firm, provided they are not involved in another business or profession.
* ITR 4: NRIs receiving income from a domestic business or profession. An NRI can file an income-tax return in-person or electronically, each having its pros and cons.
Documents required: Along with the forms, some other important documents are also required to file income-tax returns. Let’s take a look at which document is applicable for whom:
* Form 16: This document, mainly for salaried individuals, is to be collected from your employer. It contains all necessary information about the income and also how much is deducted by the employer for tax purposes. This form serves as a proof of salary and must be attached while filing your returns.
* Form 16: This form is to be collected from all those people who deducted tax while making payments to you during this year.
These include banks, companies (with whom you hold fixed deposits), parties to whom you have given loans, a tenant to whom you may have rented your property.
* Summary of all bank accounts: Especially when you have your own business, one should keep a record of all the bank accounts that you have operated during the year. This keeps track of all the income as well as investments and expenses.
* Property details: Rent received on any property owned should be maintained along with the municipal tax receipt. If the property was bought through loan, loan details and interest certificates should be kept as well.
* Sales and purchases of investments: All documents corresponding to sale or purchase of any assets or investments must be kept. If there are a large number of transactions, it is better to calculate the total profit or loss incurred before calculating interest.
Details of tax payment: This is in case of advance payments.
Deadline
The last date to file your returns is July 1, 2011. For those who need to get their account books audited under the Income-Tax Act, the last day is October 1, 2011.
How to file tax returns
There are two options for filing tax returns.
* For electronic filing, you have to visit the income-tax department’s website and download the tax return in a valid XML format.
Log on to the site using the username and password and select the relevant ITR form. Upload the XML file and wait for confirmation. If the file is uploaded with a digital signature then the filing process is complete.
If not, then the Income- Tax Return Verification (ITR-V) form needs to be printed and then submitted physically at the income-tax department.
* For physical filing, download the ITR form along with the acknowledgment form and file them with an income-tax officer.
(The writer is the CEO of bankbazaar.com)