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There is little less than a day and a half left before the deadline for submitting the Income Tax return (ITR). The deadline, July 31, is fast approaching. Meet this deadline if you don’t want to pay late fees, default interest on taxes owed, and lose other benefits of filing the ITR before the due date.
At the same time, it is important not to forget to report any deferred or unusual income received in the last year, regardless of the amount. Most of this income is not taxable or exempt to some extent, but you must still report the amount in the appropriate column and schedule and claim the tax exemptions.
interest income
You earn interest on your savings account balance or if you have time deposits at a bank or post office. Interest income above a certain limit is taxable.
“Interest accrued during the year is taxable under the heading ‘Income from other sources.” The taxation of interest depends on its source.
A deduction of up to Rs 10,000 (Section 80 Income Tax Act) is allowed from the total of your Savings Bank accounts for interest income during any financial year. Seniors can avail a deduction of up to Rs 50,000 under Article 80 TTB in this case.
However, not all interest income is taxable. For example, interest income from public provident funds is tax-free.
Capital gains income
“Profits from the sale of fixed assets such as real estate, stocks and securities, etc. are treated as capital gains.
The tax rate on capital gains differs depending on the property from which it is derived and the holding period. For example: “Capital gains on listed shares are considered long-term (LTCG) if held for more than one year (taxed at 10%) and two years for unlisted shares (20% indexed).
“On the other hand, short-term capital gains are taxed at 15% for listed shares and the plate tax rate for unlisted shares.
“For real estate, the LTCG is taken into account at 20% (with indexation) after two years in prison, while the STCG is imposed at the plate rate.
There is a separate field on ITR forms for capital gains disclosure. “Income from capital gains (whether short-term or long-term) must be reported on Schedule CG of the tax returns.
Gifts and inheritance
Gifts are always welcome, but in some cases the tax department will want a piece of it.
“Monetary and in-kind donations are taxable unless they fall into the exempt category. Donations should be reported under “Income from Other Sources” and taxed at a flat rate.
Gifts from relatives such as father, mother, brother, sister, and spouse are tax-free, regardless of the amount. Family inheritance is also exempt from the law. However, “beneficiaries are still required to disclose the amount of the tax-exempt gift or inheritance in the ITR “Tax-exempt income” table.
However, gifts received from others are treated as income and tax is payable if the sum of gifts received during the year exceeds Rs 50,000. No tax is payable if the gifts received are below the threshold of Rs 50,000 per year.
“If the total value of cash donations received during the year exceeds Rs 50,000, the full value is taxable. In other words, if two of your friends donate Rs 25,000 each, for a total of Rs 50,000, you don’t have any.” Tax on that, but if one gives a donation of Rs 26,000 and the other gives Rs 25,000, the total is Rs 51,000.
“However, if you received a gift on the occasion of her marriage, the entire gift is tax-free, whether it’s from a close relative, a friend, or anyone else. There is no other occasion where cash donations received from an individual are exempt from tax if they exceed the threshold of Rs 50,000.
Monetary gifts on occasions such as birthdays, anniversaries, etc. are recorded.
prize or lottery
If you have won a prize or lottery, it will be subject to tax. “Lottery prizes and winnings must be reported as income from other sources. In addition, the tax is applied at a flat rate. “Lottery prizes and winnings are taxable at 30%.
Make sure you are using the correct ITR form
If you are an employee and have additional interest income, you can use Form ITR-1 to file your tax return. However, if you have income other than wages and interest, you may need a different form to file your ITR. “For donations, lottery and capital gains, ITR-2 and 3 forms for natural persons and HUF can be used.
Make sure you submit your return on the correct ITR form and fill in the details according to the correct schedule; otherwise, your declaration may be considered invalid.
Did illness, busy office hours, or a holiday delay filing tax returns before the July 31 deadline? You can continue to file earned income returns in tax year 2021-22.
Tax returns can be filed up to three months before the end of the fiscal year (2022-23), that is, on December 31, 2022.
According to the Central Agency of Direct Taxes, as of July 31 at 11:00 p.m., 57.8 million returns have been filed, of which 6.79 million on the last day. While returns filed on time this year are down from the 59 million filed as of December 31 of the previous fiscal year, the final number of returns filed as of March 15, 2022 was 66.3 million.
These declarations, filed after the deadline, commonly called late declarations, implied additional costs. Certain tax advantages must also be waived.
Penalties and charges
A penalty will be imposed for income tax returns filed after the due date. For those whose income does not exceed Rs 5,000, the late filing penalty is Rs 1,000. If your income exceeds Rs 5,000, the late filing penalty is Rs 5,000.
However, if your gross income is below the basic allowance of Rs 2.5 lakh for individuals (Rs 3-5 lakh for seniors), you do not have to pay the late fee.
If you don’t pay your taxes, you will also incur a late fee of 1% per month. The countdown will start on April 1, 2022 if your tax liability is less than Rs 10,000.
If your tax liability exceeds Rs 10,000 and the withholding tax has not been paid, the penalty of 1% per month will apply from the withholding tax bracket deadline date: 30% on July 15 of the tax year, 60 % before July 15. December and 100% as of December 31, March.
“Many people filed returns on July 31 with incomplete information or even no returns to avoid the Rs 5,000 late filing penalty. These returns will be reviewed in August.
You can file taxes after the deadline, but you can’t take advantage of all the benefits.
For example, you cannot transfer short-term or long-term losses if you have deposited after the due date. If the tax return is filed on time, these losses can be carried forward to tax year 2030/31 or eight years. Typically, these losses occur when assets such as stocks, mutual funds, or even real estate are sold.
However, due to exceptional circumstances, it is possible to file a non-declaration request within the time limits.
“If you want to shift losses, you can file a leniency petition at your local income tax office.
If returns are filed late, you will not receive any interest on the tax refund for the period of delay. In fact, the interest on the refund is calculated from the time you file your tax return.
However, in the case of late reports, review of the reports is allowed. So if you forgot to claim a deduction or want to report income after you file your taxes, that’s allowed.
“Returns submitted after the due date may also be reviewed until December 31, 2022.
Updated returns
Even if penalties and tax benefits are denied, it still makes sense to file your tax returns by December 31 because the Income Tax Office tracks transactions reported under Permanent Account Numbers (PANs).
“During the Covid-19 outbreak, many new people have invested in stocks. Your Annual Information Statement (AIS) reflects this and if you have not filed a tax return, you will shortly receive an opinion from the Income Tax Authority.
Also, if you have not filed any returns, the withholding rate will be doubled for monies earned in the form of fixed interest on deposits, rental, and sale of real estate, or even commissions on various businesses.
Regardless of taxable income, you need to file returns if you spend more than Rs 2 lakh on foreign travel, have a utility bill of more than Rs 1 lakh, and have foreign income and assets. Those who deposit Rs 50 lakh or more in savings accounts and Rs 1 crore or more in current accounts are also required to file declarations.
If you miss the December 31 deadline to file tax returns, a higher tax rate will apply later as you will need to file updated returns under the ITR-U.