Know why ITR reporting deadline for FY 2020-21 may be extended to December 31

Know why ITR reporting deadline for FY 2020-21 may be extended to December 31

The deadline to submit an income tax return (ITR) for the fiscal year 2020-21 is December 31, 2021. This deadline has already been pushed back twice, first from July 31 to September 30, 2021, and again to December 31, 2021. Chartered accountants and tax specialists, on the other hand, believe that there is a rationale for extending the ITR reporting date for people (whose accounts are not required to be audited)

In comparison to the previous fiscal year, FY2019-20, fewer taxpayers have filed their ITR this year in FY2020-21. According to a tweet from the Income Tax Department’s official Twitter account on January 11, 2021, more than 5.95 crore ITRs were filed for FY 2019-20. 

(January 10, 2021 was the last date to file ITR for FY2019-20). However, data shows that a little more than 3.59 crore ITRs had been filed as of December 15, 2021. With fewer than 15 days until the deadline of December 31, 2021, 2.36 crore ITRs are yet to be filed.

With less than 15 days to go, it’s probable that the rest of the people will be unable to file their tax returns due to the numerous faults that have been recorded on the newly established income tax system. It remains to be seen whether the newly opened e-filing income tax portal can handle the volume of people reporting ITRs at the same time in such a short period of time.

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Furthermore, for FY 2019-20, the government delayed the deadline for filing ITRs three times – initially from July 31 to November 30, then to December 31, and finally to January 10, 2021. The extension was granted despite the fact that the old tax filing portal was still in use, and there was no fear of new Covid-19 variations at the time.

“For individual taxpayers who are not subject to a tax audit, the extended deadline for filing taxes is December 31, 2021. Several issues with the new JSON utility continue, making it difficult for taxpayers to file their tax returns by the deadline. For example, problems in the utility linked to the computation of qualified donations and losses on residential property under the simplified tax regime must be resolved quickly. There are also operational difficulties. 

For example, the e-filing platform is excessively slow, and without an Indian cell phone or net banking, filing Form 67, which is essential for claiming foreign tax credit, and changing the password is still not possible. Furthermore, the AIS and TIS were just recently made accessible, leaving taxpayers with very little time to evaluate them before the end of the year.

Frequent Errors That Taxpayers Should Avoid While Preparing Tax Returns.

“In comparison to last year, around 50% of people have been able to file their tax returns. As a result, more than 3.5 crore tax returns must be filed in the next 15 days, which is a massive amount. Furthermore, the income tax website is brand new this year, with features such as pre-fill data, the Annual Information Statement (AIS), the Taxpayer Information Summary (TIS), and more. We anticipate the administration will make an informed choice in the next 5 to 10 days after considering all of the elements and scenarios.”

“The Income Tax Department has put out the Annual Information Statement (AIS), which gathers extensive financial data of the taxpayer, beginning with the financial year 2020-21 (i.e. for the year ended March 2021).” As a result, it is critical for the taxpayer to ensure that they have not only reconciled their income and reporting requirements with the Form 26AS, but also that they have thoroughly checked their reportable transactions / income that appears in the AIS. 

For the Financial Year 2020-21, the AIS database was just made available, which has resulted in an additional level of review that the taxpayer must complete before completing their tax return. AIS provides extensive information such as interest on bank accounts, securities transactions, mutual fund transactions, overseas transfers, deposit data, and so on. Given the income tax department’s delay in releasing AIS data on the new income tax portal, taxpayers must be given appropriate additional time to complete the process and ensure that their returns are complete in terms of income reporting and disclosure obligations.”

5 Mistakes to Avoid while Filing your Income Tax Returns!

Avoid these five mistakes while Filing your income tax returns 

Even if you aren’t new to the procedure, filing income tax returns can be difficult.
As if the tedious paperwork wasn’t enough to test your patience, last-minute difficulties on the income tax return-filing system frequently hinder a seamless completion. Add to that the numerous changes in tax rules that occur each year, and the work appears to be much more difficult. When it comes to filing your income tax taxes, mistakes are unavoidable.

For example, selecting the incorrect assessment year, failing to pre-validate your bank account, providing incorrect bank account information for refunds, failing to e-verify your return within 120 days after filing it, and so on. Then there are faults that are serious enough to warrant a notification from the Internal Revenue Service.

The complexity of the activity, in the eyes of the tax department, is not a good defence. Errors in your income tax returns forms, whether large or minor, will have to be dealt with. Here’s how to prevent some of the most typical blunders.

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Incorrectly declaring one’s residence status

The number of days you spent in India during the previous fiscal year affects your resident status and, as a result, your tax liability under income tax laws. For example, an Indian citizen or person of Indian ancestry who spent 182 days or more in India during the preceding fiscal year would be considered a’resident’. However, while determining whether she is a resident and ordinarily resident or a resident but not ordinarily resident, there are various other factors to consider.

“A lot of the time, we see taxpayers make mistakes when it comes to disclosing their residency status. They report it as Non-resident or Not Ordinarily Resident while they truly qualify as residents, and vice versa. According to Chetan Chandak, “this can lead to major tax and reporting default.” Residents must now pay tax on income received in other countries, in addition to reporting all of their foreign assets and accounts on Form ITR-2.

“If a resident taxpayer fails to do so, he or she may face significant penalties for failing to pay due taxes on overseas income as well as failing to register foreign assets and accounts.” This is especially important now that India has signed IGAs with a number of nations and established a framework for automated information exchange with other tax agencies,” he argues.

Keeping unlisted shares’ information hidden

If you own shares in an unlisted, private limited company, you must report all such stocks, sales and purchases, as well as the cost of acquisition, during the year. “This assists tax authorities in calculating your tax liability on such transactions.” If you fail to provide these data, you may be accused of submitting a false return, with the resulting penalties,” Chandak explains.

This guideline is especially important for employees who work for start-ups or other private limited firms. “That is, assuming such employees have ESOPs as part of their compensation package.” Please keep in mind that shares of foreign firms that are listed anywhere in the world may not be deemed unlisted companies for the purposes of this clause. However, depending on your residency status, those shares may be needed to be declared under the Foreign Asset Category on Form ITR.”

Have you changed jobs? Remember to report your wage for the entire year.

If you change positions during the fiscal year 2020-21, remember to request a copy of the former employer’s form-16. “In the ITR, both employers’ income must be taken into account.” You may receive a notice from the Internal Revenue Service if it is not revealed,” Soni warns.

Is it difficult to file an income tax return in India?

Interest on savings accounts is not declared.

Many of us keep large sums of money in our savings accounts to cover unexpected expenses or because we’re too lazy to invest it in higher-yielding investments. The bank now pays you interest on this balance every quarter. However, this sum is not shown on your employer’s form-16. You may receive a warning from the income tax department if you neglect to search through your bank statements for the financial year to seek for savings account interest earned and declare it in your I-T returns. This also applies to interest on fixed deposits, which must be reported under ‘Income from other sources.’

Dividend income is not disclosed.

It is possible that some private investors may completely miss declaring dividend income collected on mutual funds and stocks starting this assessment year. Even if they do, some may make mistakes when estimating this year’s income. This is due to the fact that such dividends become taxable in the hands of individual investors only beginning in the fiscal year 2020-21, and so represent a new development this assessment year.

Is it difficult to file an income tax return in India?

Is it difficult to file an income tax return in India?

What is the purpose of an income tax return? or ITR, as it is most often called.

When a person is required to submit a tax return to the United States Internal Revenue Service, this is known as an income tax return. It conceals information about a person’s earnings and the taxes that must be paid during the year.

The most important thing to remember is that the information reported in an ITR should and always refer to a certain financial year, which begins on April 1st and ends on March 31st of the following year.

As you may be aware, there are five different sources of income:
  • A salary is a source of revenue.
  • The income and gains generated by a firm or profession.
  • The revenue generated by residential property.
  • Profits from capital gains are referred to as capital gains income.
  • Dividends, interest on deposits, royalty revenue, and other sources of income are used to supplement the income.

The Income Tax Department requires each individual to file a different ITR based on their various sources of income. According to the Income Tax Department of India, there are seven different types of ITR forms: ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7, which are used depending on the nature and amount of the taxpayer’s income. In India, most people use an income tax calculator to figure out how much they’ll have to pay and which ITR they’ll have to file, so here’s a quick overview.

ITR Forms: What Are They and How Do They Work?

ITR – 1: When an individual has a total income of up to 50 lakhs from a wage, one house property, another source other than lotteries, and agricultural income of up to 5000, they must file this form.

ITR-2: Individuals and HUFs who are not entitled to file the ITR 1 form and have income and earnings from a profession or business must complete the ITR 2.

ITR-3: Individuals with income from a business or profession file Form ITR-3.

ITR-4: When an individual, HUF, or firm has a total income of up to 50 lakhs and income from a business or profession computed under sections 44AD, 44ADA, or 44AE, they must file an ITR-4.

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Is it Really That Difficult to File an ITR?

If you’re wondering if completing an income tax return is a difficult task, you’re not alone. It isn’t truly the case. In certain circumstances, filing an ITR isn’t even essential, and the task comes in when you need to know whether or not you should file an ITR.

There are some circumstances in which an ITR should be filed.

a) When a person possesses a beneficial ownership interest in an asset located outside of India.

b) When an individual has signatory power over an account that is not in India.

c) If you are a beneficiary of an asset that is not located in India.

Haven’t received an Income tax refund yet? Follow these Steps 

d) When an individual makes a bank deposit of greater than Rs. 1 crore.

e) When a foreign travel expense of more than Rs. 2 lakhs is incurred.

f) When a household’s electricity consumption exceeds Rs. 1 lakh.

What Is the Process for Filing an ITR?

Here are a few steps to help you file your ITR online using the internet.

#1. Firstly, visit the Income-tax official website.

#2. Create an account on the portal and log in using your ID.

#3. Select ‘Taxpayer’ from the drop-down menu and input your PAN.

#4. Following the validation, you will be required to provide personal information such as your name, address, and phone number.

#5: Provide your email address and phone number.

#6. After you’ve completed all of this, click on the ‘proceed’ button.

7 ways in which taxpayers can reduce their tax liability

#7. You must then verify your information using an OTP issued to your registered phone number.

#8. Enter the one-time password (OTP) that was supplied to you.

#9. Once the OTP has been successfully entered, a window will popup allowing you to review the information provided.

#10. Finally, you’ll be able to create a password and log in.

#11. After that, click register, and you’ll get an acknowledgement message and a file to return by selecting the return option.

Is It Necessary to File an ITR?

Filing tax returns is a yearly auction that every responsible citizen of the country is expected to do. It is the only way for the government to know how much money citizens spend and gives a forum for them to request refunds and other forms of assistance on a regular basis. Here’s why it’s critical for you to file income tax returns:

  •  Filing tax returns demonstrate that you are accountable.
  • In some circumstances, it is required.
  • Your loan and credit card companies will most likely want to see this information.
  • It’s also required if you want to file a claim for compensation for prior losses.
  • It will also come in handy and be beneficial in the event of updated returns.
Conclusion

If you thought filing income tax returns was a difficult task, you can now rest assured that it is not. All you need to know is whether it is required of you, which ITR you should file, and what role the returns will play in your financial situation.