The income tax department brings in several changes with regard to tax filing or tax forms on an annual basis. In April this year, the Central Board of Direct Taxes (CBDT) notified new forms to file an income tax return (ITR) for the assessment year 2021-22. As per an official statement, no significant changes were made to the new forms in comparison with the ones issued in the previous year due to the ongoing second wave of the coronavirus disease (Covid-19) pandemic in the country. “Only the bare minimum changes necessitated due to amendments in the Income-tax Act, 1961 have been made,” the statement added.
And in another major relief, the central government extended the last date for filing ITR till September 30 this year.
However, experts suggest that taxpayers should prepare for tax filing now and file the ITR as soon as possible. This will not only assist in a faster processing of tax refunds but will also reduce the chance of errors committed by taxpayers, they say.
Before taxpayers start with filing their ITR, they should keep these points in mind:
1. Even though the last date of filing ITR has been extended, it does not provide any relief from tax liability. Taxpayers may have to pay penal interest if they have advance tax due. As per Section 234A, interest is charged at the rate of 1% if there is a delay in filing the ITR. “Further, the taxpayer assessee may be subjected to interest under Section 234B and 234C irrespective of the extension of the due date,” Suresh Surana, founder of RSM India, told Livemint.
Interest under section 234B is applicable if the taxpayers have not deposited advance tax or if their advance tax deposit is less than 90 per cent of the total tax liability. Interest under 234C is applicable if the taxpayers have not deposited advance tax according to the prescribed quarterly instalments.
{{/usCountry}}Interest under section 234B is applicable if the taxpayers have not deposited advance tax or if their advance tax deposit is less than 90 per cent of the total tax liability. Interest under 234C is applicable if the taxpayers have not deposited advance tax according to the prescribed quarterly instalments.
{{/usCountry}}2. An important thing which taxpayers have to keep in mind while filing their ITR is the difference between the new and old tax regime. Livemint said that from financial year 2021 onwards, taxpayers have an option to choose between the new and old tax regimes. They are advised to choose the regime at the beginning of the year
The new regime offers to tax at a lower slab rate but taxpayers will have to forgo several deductions and exemptions under the old regime. If the taxpayers were unable to make planned investments or expenses against which they could claim the tax deduction under the old regime, they can switch to the new regime if it leads to a lower tax liability, Livemint said.
3. The tax department has to notify the tax forms annually after making changes. Taxpayers should know these changes so that they can opt for the right ITR form. Livemint said that this year, changes have been made in ITR Form 1, which is mostly filled by salaried taxpayers. This time, ITR Form 1 cannot be filled by people whose tax deducted at source (TDS) is deducted for cash withdrawal as per section 194 or those people who have deferred tax on employee stock options (ESOPs) given by their employer.
4. Taxpayers don’t have to worry if they forgot to submit proof of investments with their employers and the tax is already deducted. They can claim these deductions at the time of filing their ITR and claim a refund of the tax paid.
(With Livemint inputs)