E-filing of income tax return is now mandatory for those, including salaried individuals, earning more than Rs 5 lakh taxable income during the financial year ended March 31, 2013. Previously the income level was above Rs 10 lakh. Now, more people will have to file their returns online.

Taxpayers are currently readying for a meeting with their tax consultant, or collating data to file their return before the due date.

Those who incurred losses in the capital market will be more anxious, as they cannot carry forward their losses if they do not file returns before the due date. There are some additional areas that require attention when filing returns this year.

Dual employer and other income: If you have changed employment during the year, be sure to report the salary received from both employers and claim the relevant tax deducted at source. If both employers have extended the deductions (such as under section 80C or 80G), report the correct amount in the return and pay the balance tax, if any. Also, verify the other income reported in the declaration form and captured in Form 16 with the actual amount.

Capital gains: Calculate the actual quarter-wise gains to be reported to avoid unnecessary interest calculation under section 234C by the Tax Department’s systems.

Donations: The Permanent Account Number (PAN), name, and address of the recipient should be filled to claim deduction under section 80G.

Bank accounts/ assets outside India: Residents should provide the relevant financial information for accounts/ assets outside India, as required in Schedule FA of the form.

Tax credit verification: Check Form 26AS before filling tax payment details to ensure that any tax paid on your behalf is correctly captured by the Department’s system.

Some of the key changes this year are:

Exempt incomes: Some individuals tend to skip the disclosure of exempt income as they think it does not affect tax liability. This disclosure was required earlier too, but the key change this year is the use of different forms.

For exempt income exceeding Rs 5,000, ITR-2 should be filled instead of ITR-1.

Exempt income is covered under section 10 and includes house rent allowance to the extent claimed exempt, long-term capital gains arising from sale of shares where securities transaction tax has been paid, dividends from equity shares/ mutual funds, and so on.

An employer’s contribution to Provident Fund which is less than 12 per cent of salary is not considered income. However, it is unclear whether this falls under exempt income to be reported in the return. If yes, then virtually all salaried employees would be filling only ITR-2; the Central Board of Direct Taxes should clarify on this.

IFS code: It is now mandatory to include the IFS code of your bank account, instead of the MICR code quoted earlier.

Non-resident: Tax will be calculated at 10 per cent on capital gains arising on transfer of capital assets being unlisted securities, and disclosure required as income taxed at special rates in ITR-2.

So, file your return on time and relax, instead of rushing at the last minute.

Aravinda A. Garikipati, Assistant Manager, contributed to this article.

The author is Associate Director, Tax and Regulatory Services, PwC India

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