The last date for filing Income Tax Returns for individuals and entities not liable for tax audit is July 31 for the purpose of declaring self-assessment tax for the current assessment year 2022-23 ie for the financial year 2021-22
With five days to go for the Income Tax Returns Filing Deadline, every individual income tax assessee needs to bear in mind that the Central Income Tax Department has expressed no intention to extend the due date beyond July 31.
The last date for filing Income Tax Returns for individuals and entities not liable for tax audit is July 31 for the purpose of declaring self-assessment tax for the current assessment year 2022-23 ie for the financial year 2021-22.
Taxpayers who file their return beyond the deadline would be liable to pay interest under Section 234A and would also incur a penalty for late filing under Section 234F of the Income Tax Act, 1961.
The late filing fee as per Section 234F for individuals having a total income below Rs 5,00,000 in the current assessment year 2022-23 is Rs 1,000 if the returns are filed between August 1 and December 31.
However, the later filing fee increases exponentially to Rs 5,000 in the event the total income exceeds Rs 5,00,000 in AY 2022-23.
One of the prime motivations for me to file my income tax returns within the stipulated deadline is to secure easy visa approvals since the Embassies & Consulates of the foreign countries that I visit require me to furnish copies of my tax returns from the past couple of years along with my visa application.
And this has been one reason why my Visa Applications always got approved speedily.
Some important aspects to look out for while computing your income tax returns, are as follows:
a) procuring the account statement of the previous financial year from your bank(s) for all your accounts.
Note: This includes the Savings Bank accounts as well as the Current Accounts;
b) requesting your respective bank to issue an Interest Certificate which computes the interest income earned on fixed deposits during the previous financial year.
Note: The interest income earned on fixed deposits can only be assessed for the Permanent Account Number (PAN) of the first holder, notwithstanding that the FD may be held jointly between two or more persons. Hence, the interest certificate would also be issued in favour of the first holder of the FD.
c) obtaining the interest certificate for the interest income earned upon liquid holdings in the savings bank accounts. Since the banks pay interest for monies held in the savings bank account at an average rate of 3% per annum, and which is computed quarterly.
Note: It would be efficient to ask the same bank to issue an interest certificate which automatically computes the interest earned during the previous financial year for the respective account.
d) procuring the statement of Capital Gains for the Mutual Fund Holdings with respective fund houses with respect to all the folios held with the different funds under the PAN Card number of the individual assessee.
Note: Of recent, the CAMS (CAMS is the abbreviation used for India's largest mutual fund transfer agency Computer Age Management Services) provides users with the option of downloading a consolidated capital gains statement based on the PAN Card details of the user.
Computing Income Tax as per the slab rates declared for the current AY 22-23 represents an effort in economic mathematics which requires the practical application of mind based on properly defining the source of income and ascertaining whether the said income can be claimed as a deduction available under Section 80 of the Income Tax Act.
For instance, Section 80TTA provides for deductions of upto Rs 10,000 earned as interest income from holdings in a savings bank account for the previous financial year.
A similar deduction is available for Senior Citizens beyond 60 years of age and as per Section 80 TTB, the deductible amount goes up to Rs 50,000. The global interest income earned from Savings as well as deductions from a proportion of the FD interest income can be claimed as a deductible by a senior citizen under this section.
The most significant deduction available to taxpayers is to be found in Section 80 C of the Income Tax Act, whereby an individual can claim upto Rs 1,50,000 as deductions towards investments made in Public Provident Fund (PPF), Equity linked saving scheme (ELSS), principal amount payment towards home loan, stamp duty and registration charges for purchase of property, Sukanya smriddhi yojana (SSY), National saving certificate (NSC), Senior citizen savings scheme (SCSS), ULIP, tax saving FD for 5 years to name just a few avenues.
Here it also needs to be clarified that in the event of sale of immovable property by an individual in a given financial year, Long Term Capital Gains (LTCG) Tax would be applicable upon the sale of the plot/apartment/house and which is presently computed at the rate of 20% upon the total capital gains accrued upon the sale of the property in comparison to the original cost of acquisition after having adjusted for indexation as per the cost of inflation.
Within the Income Tax Act, 1961, there exists a way around saving the LTCG Tax which is straightforward and perfectly legal.
For instance, once the Capital Gains upon the sale of a plot of land have been computed, the computed amount of net gain upon which the 20% tax would be applicable can be invested in Infrastructure Bonds such as the Bonds issued by the Rural Electrification Corporation (REC) or even the NHAI (National Highways Authority of India). The bonds are issued under Section 54 EC which provides exemption from long-term capital gains tax in the event that an assessee invests the net capital gains within six months after the sale of his property in long-term specified assets such as the aforementioned bonds. Aside from saving tax, these bonds also pay an interest rate of 5 to 5.75% per annum computed bi-annually. These bonds have a compulsory lock-in period of 5 years.