I have been filing my ITR since almost 15 years now. Before 2011, I used to do it manually. But since 2011, ITR filing was possible online; right from the comfort of my home.
No doubt, online ITR filing has made live of many people like me extremely easy. Though I still could not understand why, I have to pay tax in first place (judiciously) and then also submit a proof that I have complied. Though this is separate debate all together. In this post we will stick to the topic of check-points one should maintain before filing ITR 2017.
The purpose of this blog post is to help those newbies who are very new to the process of Income Tax Return (ITR) filing. The check points suggested in this blog post will certainly help them when they are actually filing their income tax returns online. There are suggestions more from my personal experiences than from any copy book rules.
As we all know, the last date for filing income tax return is July 2017. It means, from today, the D-day is only 11 days away. But do not panic. Only few days back I have filed my ITR for 2017, and its simple than ever. But for sure there can be problems for people who are not ready with these essential checkpoints.
Even in this new world of digitization, I have always maintained a balance between paper-work and soft-copies. Particularly in case of critical activities like ITR filling, I prefer a little bit of paperwork before actually filing my returns.
Even after taking all care, there are examples where, unknowingly, people make mistakes while filing their Income tax returns. There is provision which allows one to rectify their previously filed IT Return. So, do not worry, even if mistakes happen, heavens are not going to fall.
Nevertheless, let’s look at the checkpoints which will help anyone to eliminate mistakes as far as possible.
#1. Check if your Income is Taxable?
If someone’s income is coming in the taxable limit, then for such a person, filing ITR 2017 is compulsory.
What is the taxable limit? The taxable limit in this case is Rs.2.5 Lakhs. It means, if anyone’s income is above Rs.2.5 lakhs per year, then he must file his IT returns.
So what happens to those people whose income is below Rs.2.5 lakhs per annum?
For those people, they may or may not file the IT Return. But experts always suggest that, even people with lower income must file their IT returns. The filed ITR becomes a genuine income proof for the person. This is one of the most important criteria to get any kind of loans from banks etc.
#2. Check if you have got the Form-16 from your company
This is one document without which you cannot file your ITR 2017.
This is not a new document. Since ages, companies have been issuing form-16 to its employees. So if your do not have this in your hands, go and ask for it.
What is form-16?
Form 16 is a document which declares your last financial years income. It also declares the income tax that has already been deducted in the last financial year.
In order to file ITR AY 2017-18, you must have a form-16 for FY 2016-17.
There can be a case that in last financial year (FY) one has moved a job. It means, in last 12 months, the person has drawn salary from 2 companies. In this case, the person will need form-16 of both the companies.
For people who are not salaried, will not have the comfort of form-16. These people will have to maintain their own Income Tax Return folder. In that folder keep the following documents:
- Bank Statement of FY 2016-17
- Proof of tax saving investments done in FY 2016-17
- ITR of last FY 2015-16
- Proof for Life Insurance, Medical Insurance, Retirement linked savings etc
#3. Link your Aadhar No. and PAN
This is one step which has been made mandatory only from this year.
Central Government of India has made it mandatory for everyone to link their Aadhar No. with their respective PAN number.
For people who has been filing online returns in last years, has to just go to their income tax e-filing account and login. As soon as the login is activated, a popup window with prompt the user to enter their valid Aadhar number. After entering the Aadhar number, a verification code will be sent to the registered mobile number (linked with Aadhar) by SMS. Typing this verification code onto your computer screen will link the Aadhar and PAN. That’s it, if everything is in place, this linking procedure will not take more than 1 minute.
Some might ask why, government is making this linking mandatory? Frankly speaking I do not know the real reasons. But this time, after I uploaded my ITR document, just by use of OTP, I could E-Verify my returns within 30 seconds. This was possible only because my Aadhar and PAN were linked.
#4. Check if your investments has yielded capital gains
Many a times, we buy and sell mutual funds, stocks, ETF, real estate property, in a haste for the sake for booking quick profits.
It’s good that profit was made, but on those profits, it is also essential to pay Income tax.
Keeping a note of all your investment transactions happened in FY 2016-17 is essential.
To know more about income tax planning, visit this link.
#5. Check and keep a note of all types of source of income
Yes, it is necessary. Not all income are taxed at the same rate.
Income generated after long term equity holding is tax free. Income generated after long term real estate property holding has much lower tax rates. Income generated from mutual funds with indexations benefits can account for much lower tax liability.
Idea is to be aware of ones all source of income. It can save you a lot of money.
#6. Check if the Filing of ITR 2017 is being done on the right Form
Individuals, whose income is below Rs.50 lakhs must file their returns on form name ITR-1
Other forms are as below: