Things to remember while filing tax returns :Economic Times

It is the time to start preparing for filing of the tax returns for the financial year 2011-12. Here are some points which you need to consider.

Check your form 26AS

First of all, the most important thing is to check your taxes paid on Income Tax website - namely verifying your Form 26AS. This form contains details of the income paid to you and the taxes deducted and deposited by the payer of income.

If you find any discrepancy, immediately take this up with the payer of income. For example, if the payer has indicated your incorrect PAN number etc., you may not be able to claim the credit of taxes withheld without getting the details corrected. Timely reviewing of details now will give you confirmation and also allow you get details rectified before filing of the tax return.

Select the right form

This year the government has amended and notified the new forms. You should carefully analyse your situation in order to pick up the right form. The new forms and the criteria of using the same are given below:

(Form No. followed by applicable to individuals/HUFs having income from)

ITR - 1 (SAHAJ):

Salaries

House property (where the individual does not own more than one house property)

Other sources (except winnings from lottery or income from race horses)

ITR - 2: Other than income from business and profession.

ITR - 3: Being partners in firms and not carrying out business or profession as a proprietorship concern.

ITR - 4: Proprietary business or profession.

ITR - 4S (SUGAM): Business and profession and opted for being taxed under presumptive basis of taxation under sections 44AD and 44AE.

While selecting the form you also need to bear in mind an important change made in the Budget 2012 regarding reporting by ordinary residents of foreign assets and of accounts where an individual is a signatory etc. If you have any such item to report, you will need to use ITR 2, 3, 4 (as applicable), even if your situation may fall to use form ITR 1.

Further, where ordinarily residents have foreign assets to report, they would need to file the return even though they may not even have taxable income. This is a new requirement and individuals should start compiling:

Details of foreign assets

a) Details of foreign bank accounts with the peak balance during the year

b) Details of financial interest in any entity with total investment at cost

c) Details of immovable property with total investment at cost

d) Details of any other asset with total investment at cost

e) Details of account(s) in which the person has signing authority and which has not been included in A to D above -

Name of the institution in which the account is held;

Address of the institution;

Name mentioned in the account; and

Peak balance/ investment during the year.

Paying timely attention to this aspect is important as some of the details may not be readily available with the tax payer.

Smart things to know: Tax deduction on HRA : Economic Times

House rent allowance often forms a part of the salary structure offered to an employee. If one uses the tax benefits available on this component, it helps increase the takehome salary.

Income tax rules allow a deduction from taxable income of the least of the following: a) HRA received; b) 50% of basic salary (if living in a metro, 40% elsewhere) and c) rent paid minus 10% of basic salary.

Since the taxable income is reduced to the least of the three parameters specified above, the tax deducted at source (TDS) by the employer comes down and increases the takehome salary.

The employer may require rent receipts to support the claim for tax deduction. In some cases, the employer may also ask for the lease agreement. The taxable income is calculated only after taking into account the tax exemption.

If tax exemption for HRA is not claimed by providing the documents and a higher TDS is paid, one has the option of claiming a refund of the excess tax at the time of filing returns by producing the required documents.

Refund excess tax despite 4 year limit period: CBDT to officials :Economic Times

NEW DELHI: Giving relief to taxpayers, the Income Tax Department has asked its officials to take action to refund excess tax even if such applications are hit by limitation period of four years.

"After due verification of any such claim on merits, the assessing officer shall issue refund of the excess amount, if any, so adjusted by CPC (Central Processing Centre at Bengaluru) due to inaccurate figures of arrear demand uploaded by the assessing officer," the Central Board of Direct Taxes (CBDT) said in a circular.

The circular will also help tax officials in resolving disputes regarding arrear demands shown as outstanding against them in the records of assessing officer and refund the excess tax collected from them.

In absence of the clarification, the officers could not have corrected or reconciled such disputed arrear demand due to limitation of four years.

Also, in some cases, CBDT said the assessing officer have uploaded such disputed arrear demand on the Financial Accounting System (FAS) portal of CPC.

This resulted in adjustment of refund arising out of processing of returns against arrear demand which has been disputed by assessees on the grounds that either such demand has already been paid or has been reduced in appeals, etc.

Under the existing provisions of the Income Tax Act, the assessing officer cannot look into refund cases which are more than four year old.

In 2011-12, the Income Tax Department had issued refunds of about Rs 95,000 crore, while the refunds in the first two months of the current fiscal totalled Rs 16,900 crore.

CBDT has also asked the officials to remove discrepancies in tax demands in the data being maintained by the CPC.

Finance Minister Pranab Mukherjee in May had informed Parliament that problems arising to taxpayers due to incorrect uploading of data would be addressed.