Beat the tax blues this time

Like the inevitable Monday morning blues, the annual tax blues are here to make us gloomy again. Gathering all the necessary documents, crunching the numbers, getting them right, putting them together in the return forms and visiting Aayakar Bhavan can consume a whole lot of your productivity at office in July!

But, over the last few years, the Government has been taking several steps to simplify taxation laws and the procedure for filing returns. These are aimed at making compliance easy and the whole experience hassle-free. As the tax-paying season approaches, what are the additional tax-payer friendly measures to look out for?

Bye-bye to filing

If your source of income consists of only salary and interest from savings bank account and your total income, after allowable deductions, is less than Rs 5,00,000, relax. The July 31 deadline would not matter to you this year as you are exempt from filing your returns!

Before you rejoice, do a double-check though. This exemption comes with a number of strings attached. To be eligible, you shouldn't have switched jobs during the year. “A change in employment may lead to overall short deduction of taxes as the salary received from /TDS deducted by the first employer may not have been properly disclosed and slab rate benefits may have been given twice at the time of deductions”, says Ms Parizad Sirwalla, Executive Director, Tax, KPMG. Another condition is that the interest income from the savings account should not exceed Rs 10,000 and you must have reported this to your employer.

This googly may bowl out many who would have otherwise been eligible to get away from the chore of filing returns. If you have a fixed deposit linked savings account and you earn interest both on the FD and on the SB account, you might automatically be disqualified, even if the interest, put together, falls below Rs 10,000.

Tax practitioners also agree that many would not declare interest on savings account to be included in Form 16 for deduction of taxes. The notification too came only in June 2011, while the deadline for Form 16 expired on May 31 itself.

Besides, this criteria also brings in some practical difficulties as employers normally have cut-off dates for declaration of other income and savings, which is well before March 31 of any year. So, savings bank interest would not be for the entire year; declaration on an accrual basis may not be easy too.

The next condition is that you should have paid the entire tax due by way of deduction at source and should have no refund or shortfall. This criterion, perhaps, aims at providing a fillip to those who plan their tax savings well in advance and do not wait till the last minute. Besides, if you have been issued notices by the Department in the past you don't qualify.

So, who will actually benefit from this proposal? “My view is that it will help only those who have income just above the Rs 1.6 lakh slab or those who are 3-4 years into their employment, draw salary income of less than Rs 6 lakh and do not possess any house property”, sums up Mr C. Ramachandran, a practising chartered accountant based in Chennai.

Welcome to Sahaj and Sugam

Two new forms, Sahaj and Sugam, to replace your old IT forms have been introduced this year. The Sahaj replaces ITR-1 and so, if you are eligible for ITR-1, you need to switch to Sahaj. Sugam (ITR-4S) is aimed at simplifying disclosure requirements for individuals and HUFs whose business income falls under the presumptive taxation net (Sec 44AD and 44AE).

Sahaj and Sugam, being technology-enabled forms, standardise the manner in which data is received. For example, the Department received approximately 36 different types of the earlier ITR-1, making processing slower. Sahaj will, hence, help speed up the processing and, therefore, the issue of refunds.

You may spend less time on filing your returns this year, as these forms, though new, are user-friendly. The features include built-in instructions alongside the rows and columns, simplified schedules for TDS and other tax details, worksheets with instructions for easy computation and the non-requirement of disclosures relating to high-value transactions (AIR).

Also, a list of common mistakes committed when filling up the forms has been made available, to aid submission of error-free returns. Four important things that you must remember when filing Sahaj and Sugam are: to compulsorily fill in your bank account details (earlier it was necessary only if refund was due), to attach supplementary schedule sheets even if you don't use them, to take only colour print outs and to print only on A4 size paper.

Bye-bye to scrutiny

This year, there will be no scrutiny assessment for a select group of tax-payers. The reasons for your return to be chosen for special scrutiny by the Tax Department usually range from a random selection to claims made for deductions/losses/exemption being more than the Department thinks is allowable. It may also be due to any high-value transactions or a shortfall in taxes paid.

Individuals above 60 years of age ( senior citizens) and small tax payers (individuals and HUFs whose gross total income before deductions does not exceed Rs 10 lakh) , filing ITRs –1 and 2 , would now enjoy the privilege of not being taken up for scrutiny at all. This has been implemented following concerns from such assessees about prolonged enquiries and the selection of the same cases year after year.

Welcome to convenience

The tax department is also making every effort to be available at your doorstep, as you pay up your tax. Beginning this year, three new services will be available on the e-filing Web site. At a click of the mouse, you will now be able to check the receipt status of ITR-V at the processing centre in Bangalore, the processing status of your e-return and the status of refunds. These services are also available through the Department's call centre (Direct: 080- 22546500; Toll free: 1800-425-2229).

For those who have filed e-returns, rectifications can also be made online, if necessary. Besides, all intimation orders are being sent by e-mail to taxpayers as a digitally-signed, password-protected document. SMS alerts on completion of processing and determination of refunds have also been introduced in the past year.

What more, this year, many more banks are giving you the option of paying taxes at their ATMs and the choice to view your Form 26 AS (which shows details of your TDS and other taxes paid and refund given) through their net banking facility!

The e-filing edge

E-filing of returns is becoming quite popular, going by official statistics. 2010-11 saw an 80 per cent growth in e-returns over the year before, to Rs 91.56 lakh. So, save that half-day's leave and forget the long queues. With all the data and documents in place, e-filing is expected to take only about 30 minutes of your time.

For the tech-savvy who know a bit of taxation laws too, incometaxindiaefiling.gov.in is the site you should go to. For others, there are several Web sites that help you for a fee. Mr Ankur Sharma, CEO, Taxspanner.com says that once you upload your Form 16 on to his Web site, it takes only two minutes to e-file your ITR!

This year, banks such as Canara Bank and PNB, have tied up with taxspanner to help their customers e-file their returns at a concessional cost. Taxspanner also offers it services through m.taxspanner.com for the mobile phone and through an application on facebook. Considering that capital gains tax computation is a brain-drainer for many, broking houses too are chipping in to help their clients. “The journey of a customer ends only after he files the return on the investment platform”, says Mr Hariharan, VP, Product Advisory at ICICI securities.

The company has introduced a capital gains calculator for ICICI direct customers this year, along with an integrated e-filing service for tax returns.

While some are offering the service to existing customers, some are riding on the tax-filing wave to get new clients. “We have a partnership with taxyogi.com to help retail customers file ITR-1 and 2. Those who open a new account (account opening is also free) with us can file their taxes online for free. Existing customers too can file for free, if they have provided one referral at least”, explains Mr C. R. Chandrasekar, CEO, fundsindia.com, an online platform for investing in mutual funds, equities and fixed deposits.

Electronic filing is not only convenient but also superior to manual filing. It helps many employees who go on short stints abroad file their returns on time, irrespective of their presence here.

Two, intermediaries serve as a digital storehouse for your records, freeing you of the burden — examples being Taxspanner's ‘Taxvault' and and Taxsmile's ‘My docs'.

Three, the processing of refunds is faster for electronically filed returns. Mr Ravi Jagannathan, MD & CEO of e-Mudhra, explains how several assessees who filed their returns through Taxsmile.com (an initiative of e-Mudhra) last year, got their refunds by December 2010 itself. Four, unlike manual filing, where confidentiality tends to take a back seat, e-filing is absolutely safe.

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