The Khannas & The Order Of Taxation
WHEN there is a new Harry Potter book due and the latest Harry Potter film is in theatres, the Khannas should be consumed by Pottermania. Not surprising, given that Mr and Mrs Khanna have two precocious kids, who are obsessed with the wunderkind of Hogwarts. Unfortunately for the kids, mom and dad spent much of the weekend labouring through eight ITRs (income-tax returns) in an effort to file their returns in time. The latest changes in the filing formats have convinced them that someone in the government has decided to cast the ‘Confundus charm’, which is used to confuse objects and people, on unsuspecting taxpayers. While ET cannot magically fill the forms for the Khannas, we can definitely make their task easier. Here are some useful tips from its wizards of personal finance for hassle-free filing of tax returns. WHICH FORM TO GO FOR The old Saral form might have to go into the wastepaper basket. New forms have to be filed for the assessment year 2006-07. There are eight forms — ITR 1,2,3 and so on. Of these, the first four are applicable to individuals and Hindu undivided family (HUFs). Thus, if you simply have salary and interest income, you have to fill form 1. However, if the income is derived from sources such as house property or capital gains or dividend, it would be form 2. Forms 3 and 4 are for businessmen and professionals. Check the matrix to see which form is the one to file if you have multiple income sources. OLD INCOMES If the taxpayer has to file the return for the year April 2005 – March 2006 or any other previous year, the same has to be filed through the old Saral form. CLUBBED INCOMES If you want to club the income of your spouse or minor child with your income, ITR 1 is not the one for you. ITR 1 is a limited purpose tax return having provision for disclosure of income derived from salary, interest and agricultural income only. So, if you have derived income only from salary, but your spouse has income from house property, which is to be clubbed in your return, you will have to file the return in form ITR 2 instead of ITR1. DISCLOSURE An additional burden on the taxpayers this year is the disclosure of transactions such as large investments made in bank deposits, mutual fund units, shares or even property in the year 2006-07. This list includes: • Cash deposits up to Rs 10 lakh in any single bank during the year • Payments made via a single credit card for an amount aggregating to Rs 2 lakh • Purchase of units of a mutual fund for Rs 2 lakh • Acquisition of bonds or debentures issued by a company for Rs 5 lakh or more • Acquisition of shares for Rs 1 lakh or more • Purchase or sale of immovable property for Rs 30 lakh or more • Investment in RBI bonds for Rs 5 lakh or more E-FILING ITR forms are available on the website of the department Taxpayers are required to print, fill and submit it to the department. Alternatively, the forms can also be filed electronically. If the return is digitally signed, the return filling process is completed upon generation of the acknowledgment form by system once the tax return is successfully uploaded. However, if the return has not been signed digitally, the system shall generate form ITR-V (acknowledgment-cum-verification form) instead of the single page acknowledgment form. You are required to take a print out of ITR-V, fill up the verification details and submit the same physically with the local income tax department within 15 days of e-filing of the return. NO DUPLICATES You no longer have to fill forms in duplicate and in its stead is now an acknowledgment form. The tax department has provided a separate single sheet for acknowledgment that is to be filled up along with the return. The same shall be stamped for acknowledgment and given back to the taxpayer. NO ANNEXURES This year, you need not provide photocopies showing investment proof, or even Form 16/ 16A. It’s only the ITR form that reaches the tax department. Any proof of investment, advance tax receipts, self-assessment tax receipts or any other document whatsoever have been done away with. The tax officers in fact have been asked to detach and return any such annexures attached to the return. USING EXTRA SHEETS In the new forms, there is space enough for only two entries under the salary, house property and TDS heads. Where space is a constraint, separate sheets could be attached. Thus, if one has salary income from more than two employers or is holding more than two house properties or where tax has been deducted from more than two sources, attach a separate sheet of paper.