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Your money: Got foreign assets? You have to file income tax return

In case Ordinarily Resident in India held any asset located outside India at any time during the preceding year. Then the person is liable to file an ITR in India, as per the Income Tax Act,

A person is “ordinarily resident in India” if they have lived in India for at least two out of every ten financial years. Or, if they have lived for 730 days or more in the previous seven financial years.

If you are a Normal resident in India and beneficially possess or are a beneficiary of overseas assets. Then, you must report the details in ITR Schedule FA.

A ‘beneficial owner’ of a foreign asset, refers to someone who has provided the consideration for the foreign asset; whether directly or indirectly, for the immediate or future profit of himself or anybody else.

A ‘beneficiary,’ on the other hand, is someone who, despite not having paid for the asset, benefits from it during the financial year.

The tax department is looking for all the information regarding the peak balance of an account/ investment during the accounting period; the closing balance/ closing value of an investment at the end of the year; interest paid or credited in a foreign bank account; gross proceeds from the sale of an investment in Indian currency; the cost of immovable property; and the income derived from it, among other things.

It’s important to note that Schedule FA just demands information about overseas assets; the income earned from them must be reported to the IRS under the appropriate ITR head/schedule (i.e. capital gain, house property, other sources, etc.)

Thus, to prevent legal complications, It is in the best interests of residents to disclose their global assets and income. Even if they did not receive those assets in India.

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Deadline To File Income Tax Returns Extended To December 31

The government announced on Thursday, that the deadline for filing income tax returns has been extended to December 31, due to the coronavirus epidemic and ongoing technical issues with the government’s website. Normally due by the end of July, the deadline was earlier postponed from May to September 30, owing to the coronavirus epidemic.

filing income tax return deadline

“In light of the difficulties reported by taxpayers and other stakeholders in filing Income Tax Returns. And The rise of various reports of audit for the Assessment Year 2021-22 under the Income-tax Act, 1961(the “Act”). The Central Board of Direct Taxes (CBDT) has decided to further extend the due dates for filing Income Tax Returns. As well as, various reports of audit for the Assessment Year 2021-22,” according to the Finance Ministry.

Deadlines and schedules for filing Income Tax Return

“The due period for filing Income Returns for the Assessment Year 2021-22; which was 31st July 2021 under sub-section (1) of section 139 of the Act. As extended to 30th September 2021 by Circular No.9/2021 dated 20.05.2021. It is thus further now 31st December 2021”.

From November 30, 2021, the CBDT has extended the deadline for filing ITRs for businesses until February 15, 2022.

income tax return filing date extended

The deadlines for filing the tax audit report and the transfer price certificate got extended to January 15, 2022, and January 31, 2022; from the previous deadlines of October 31 and November 30 respectively. The deadline for filing a late or revised income tax return is also extended by two months, i.e., to March 31, 2022.

Concerning the tax portal’s difficulties, the finance ministry stated on Wednesday that it is working with Infosys to provide a smooth filing experience for taxpayers.

The CBDT released the paperwork for filing Income Tax Returns for the 2020-21 fiscal year on April 1. Under section 115BAC of the I-T Act, the government had given taxpayers the option of choosing a new tax regime for the fiscal year 2020-21. For more such updates, keep watching this space!

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Top mistakes to avoid while filing Income Tax Return (ITR) for AY 2021-22 this month

For the fiscal year 2021-22, all people with an annual income of more than Rs 2.5 lakh and who are under the age of 60 must file an ITR. Senior individuals with an annual income of less than Rs 3 lakh are not required to file an Income Tax Return. ITR filing is not necessary for senior persons over the age of 75; whose main source of income is pension and interest on deposits.

The deadline to file your income tax return for FY 2020-21 (AY 2021-22) is September 30. Despite the fact that the ITR filing deadline is set to be extended, taxpayers should make every effort to file their taxes this month. Tax filing is a yearly obligation, and it is usually preferable to do it as soon as possible.

income tax return

Here are some common mistakes that taxpayers should avoid while filing their ITR:

01

Interest income from a savings account is not reported

Many people overlook the interest earned on their savings accounts. However, according to income tax laws, you must report your interest income from savings account deposits as well.
Individuals are excluded from paying income tax on the interest generated on savings accounts up to Rs 10,000 under Section 80 TTA of the Income Tax Act. Under Section 80TTB, the exemption ceiling for older citizens is Rs 50,000.
02

Not including the interest income earned from Fixed Deposits

Interest income from fixed deposit accounts is taxable under the Income Tax Act. As a result, you must report this income on your ITR.
03

Filing incorrect ITR form

There are numerous ITR forms for different types of income. As a result, you must use the ITR form that corresponds to your revenue sources.
04

Ignoring the importance of e-verification

It is required to e-verify ITRs within 120 days of filing returns. The processing of your ITR will be hampered if you do not e-verify. E-verification is simple to complete using your net banking account, Aadhaar OTP, and other methods.
05

Failure to compare the new and old tax regimes in order to maximize tax savings

This year, you can file your ITR under both the new and old tax regimes. You'll obtain deductions and exemptions under the previous tax system, but not under the new one, which has a low tax rate and no deductions or exemptions. To maximize your tax savings, choose the better of the two options.
06

Ignoring the interest earned on money given to a spouse or child as a gift

Interest gained on the money you may have gifted to your spouse or child must be included in your income. When the money given to you is invested, you will earn interest.
07

Failure to record dividend income

Dividend income from stocks and mutual funds was previously tax-free. Individual dividends from equities and mutual funds will be taxed at the slab rate beginning in FY 2020-21. As a result, you should report dividend income in your ITR this year and pay the appropriate tax.
08

Not matching Income and TDS with the details filled on Form 26AS

Form 26AS is an annual tax statement that lists all of your earnings for the previous fiscal year. As a result, the information you supply on your ITR should match the information on Form 26As. If the income stated on your ITR does not match the income shown on Form 26AS, you may receive an Income Tax Department notification or a reduced refund.

For more such updates, keep watching this space!

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What to look for, while filing an Income Tax return this year.

The Income-tax department of India introduces some changes in the Income-tax filing process every year. The taxpayers need to be aware of these changes. It is better to have awareness and make no mistakes in the tax filing process or the tax forms.

The Income tax is levied on the income earned in India, by all the individuals, partnership firms, and corporates as per the Income-tax Act of India. In the case of individuals, if their income is above the minimum threshold limit. The tax is levied as per the slab system given by the Income Tax Department of India.

Income Tax Slab

tax return

In India, a slab system governs the tax levied on an individual taxpayer. A slab system means different tax rates for different income ranges. Tax slabs generally increase the tax rates as the income increases; this system ensures fair taxation in the country. These income tax slabs go through certain changes every financial year.

Whether you are filing a tax return for the first time or if you’ve been in the game for long. It is advisable to keep an eye on these factors while filing your tax return for FY 2020-21.

Income Tax Slab Rates for the Financial year 2020-21 (AY 2021-22)

In this new regime, taxpayers have options to pay their income taxes as per the new regime or to continue with the old regime. The new regime offers to tax at a lower slab rate but the taxpayer has to forgo various deductions and exemptions available under the old regime. Or, The assessee can continue with the rebates and exemptions by staying in the old regime and paying tax at the existing higher rate.

It is advisable that the taxpayers must choose their regime at the beginning of the year. However, if you were not able to make the planned investments or expenses against which you could claim the tax deduction under the old regime. You can switch to the new one if it is resulting in lower liabilities for you.

Extension of date

The last date for filing ITR (Income Tax Return) is extended to 30 September. However, it doesn’t provide any relief from the tax liabilities. If you have an advance tax due, you may need to pay the penal interest. Hence, it makes sense to file the ITR as soon as possible. This will also help in the faster processing of your tax refunds.

Changes in tax forms

The tax department notifies about the income tax forms every year after incorporating any changes. Therefore, It is necessary to be aware of these changes in order to choose the right ITR form.

This year, there are certain changes introduced within the eligibility criteria of ITR 1, which is generally used by salaried taxpayers.. For this year, A person can not file ITR 1, if their TDS (Tax Deducted at Source) has been deducted for cash withdrawal under Section 194N. Or if the person has deferred tax on employee stock options (ESOPs) received from the employer.

Unclaimed deductions

In case you forgot to submit the proof of investments like life insurance, or health insurance premium with your employer and the tax has already been deducted. You can still claim these deductions at the time of filing ITR and claim a refund of the tax paid.

To ease the process, it will be better to collect all the documents like Form 16, Form 26AS and bank statements before filing your Income Tax Return.

For more such updates, keep watching this space!