TDS certificates like Form 16, Form 16A, Form 16B, Form 16C, etc
Tax Payment Challans
Investment Proofs (Investments and deductions claimed under section 80C, 80D, 80E,80TTA, etc.)
Now, let’s move on to the list of other documents needed by taxpayers to make ITR filing simple. The documents have been divided based on the income sources of the taxpayer.
1. Deductions claimed under Chapter VI of the Income Tax Act, 1961- You may not necessarily require these while filing your ITR. But it is necessary to keep these documents in handy.
A GDP decline of 23.9% in the First Quarter! Fiscal Deficit at INR 8.21 tr. – 103% of the entire 2020-21 budget estimate! GST collection 12% lower compared to last year (for the same month)…these are scary numbers and huge words!
The Tom & Jerry Bond
While people are finding fault with the Indian tax system, the taxpayer base might be just alright. Cannot believe it? Out of 130cr. Indians, only 1.5cr. pay income taxes. And the millions of other Indians simply evade it. This is one of the most common or cliche notions about Indian taxation. And now with the colossal GDP decline, the taxpayer base might just decrease further. Agreed?
People are convicted of having large amounts of income stashed away in their tijori. And the Income Tax Department is inevitably hot on their trail. And this leads to one of the biggest economic conclusions in Indian history – demonetization. Was this a blunder? Or did it help the nation?
Please note that India’s tax structure is designed in a certain way. This allows millions to escape taxes.
Firstly, the income tax threshold.
Only people earning above a certain threshold are liable to pay income tax. Currently, the minimum threshold is INR 5 lakh per year. Any guesses what is India’s per capita income? It’s approximately INR 1.4 lakh which is less than one-third of the lowest threshold! That clears out a lot of doubt. With the contraction of the economy in these testing times (COVID-19), the per capita income is going to decrease further.
Nations around the world have their income tax threshold below their per capita income. And India’s a total exception. Americans pay an average of 22% income tax, the Chinese pay 10%, Mexicans pay 15%, Germans pay 14%, and so on.
Secondly, India’s high-income inequality.
A very small fraction of Indians earn more than the per capita income. An even smaller fraction will earn thrice the amount to reach the minimum tax threshold. Only 3% of the working population (aged 25 to 65 and summing up to 2.5 cr.) earn thrice more than the per capita income.
This is comparable to nations around the world. Only 5% of Americans and 4% British earn more than three times their per capita income.
India has raised it’s tax threshold thirteen times in the last three decades. China has done it only thrice for the same era. This resulted in China’s taxpayers’ base increasing from 3% to 25% since 1986.
A conclusion can be drawn here – the higher the income tax threshold compared to the per capita income of a nation, the higher the number of people that fall outside the bracket. India’s tax threshold is just exorbitantly high for its levels of prosperity.
Coming to the crux of the matter, is it possible that India’s per capita income is artificially low because millions hide their income? Not really. Even if people hide their incomes, it should be accounted for in India’s GDP decline. The per capita income should be effected. The hidden income is being used eventually to buy goods, real estate, gold, and so on. It makes no sense that millions of hoarders are stocking piles and piles of cash in an attic every year without ever using it. Even if that is the case, it will get accounted for in the “currency in circulation” data provided by the Reserve Bank of India.
If one believes India’s GDP, economic, and per-capita income data, then one has to accept the current taxpayer base to be true – only 3% of working Indians qualify to pay income taxes.
Fiscal Deficit
The entire fiscal math is perturbed due to the current GDP decline. The GDP budget estimate for 2020-21 was – 10% increase. The Fiscal Deficit estimate was – 3.5% of GDP. Tax Revenue and Non-Tax Revenue growth were predicted at – 12% increase and 11.4% increase respectively.
Instead, the Fiscal deficit now stands at a massive 17.4% of GDP. Net tax revenue was 12.4% of the FY21 BE compared with 20.5% for the same period last year. Non-tax revenue was 6.4% compared to 14% last year.
(all figures in INR trillion)
2020-21 Budget estimates
April-July (Figures in % of BE)
Net Tax Revenue
16.36
2.03 (12.4)
Non Tax Revenue
3.85
0.24 (6.4)
Non-Debt Capital Receipt
2.25
0.05 (2.4)
Total Revenue
22.46
2.33 (10.4)
Revenue Expenditure
26.3
9.42 (35.8)
Capital Expenditure
4.12
1.12 (27.1)
Total Expenditure
30.42
10.54 (34.7)
Fiscal Deficit (Total Revenue – Total Expenditure)
The year 2020 has been a rollercoaster. There has been a lot of confusion around the recent due date extensions, ITR form schemas, list of documents, slab rates, and tax-saving deductions.
Here’s what taxpayers like you have asked. Ask us anything in our TAX QnA thread.
We’re trying to make tax filing seamless. How you ask? Salaried individuals can directly upload their statements like Form 16 (tax certificate from employer). Investors and traders can directly import their trades by logging into their brokerage account. Along with this & much more, users can choose from over 50 different deductions and maximize their tax refund!
As per the Income Tax Notification on 29th July, the due date for belated / revised ITR for FY 2018-19, has been extended to 30th September 2020. (Update: Further extended to 30th Novemeber 2020)
Revised return can be filed to rectify the details such as incomes, losses, balance sheet, etc reported while filing the original Income Tax Return.
Investors and traders can also carry forward losses by filing a revised return, provided they have filed the initial ITR before the due date.
Taxpayers having capital gains from the sale of house property, land, etc in FY 2019-20 can continue to make specific investments to claim the rollover benefit and reducing their tax liability.
Also, taxpayers have additional time to make specific investments and claim the rollover benefit for capital gains from 30th June to 30th September 2020.
Availment of Vivad se Vishwas Scheme – This is an initiative by the Government to put an end to pending direct tax disputes of Taxpayers. The Scheme aims to cater to all the taxpayers having income tax disputes in India. Taxpayers having an extension of an additional 6 months to avail benefits of Vivad Se Vishwas for settlement of Tax disputes. The due date for the same is extended from 30th June 2020 to 31st December 2020.
Income Tax compliance due dates for FY 2019-20 (AY 2020-21) – 31st October to file Tax Audit Report and 30th November to file ITR.
Update: The date was further extended on account of COVID-19, for taxpayers, under tax audit, the due date to submit the tax audit report is 31st December 2020, and the due date to file ITR is 31st January 2021. For taxpayers, when a tax audit is not applicable the ITR due date is 31st December 2020.
Note: Interest on belated Tax Payment was reduced from 12% to 9% as announced on 31st March 2020. This relief has been rolled back, and the interest penalty for belated tax payment continues to be 12% from 30th June 2020.
Note: Reduced Rates for TDS/TCS by 25% on certain non-salary payments to residents for FY 2020-21 remains unchanged.
The tax rates applicable for A.Y. 2020-21 are as follows:
General
Senior Citizen
Super Senior Citizens
Total Income
Tax Rate
Up to INR 2,50,000
NIL
INR 2,50,000 to 5,00,000
5%
INR 5,00,000 to INR 10,00,000
20%
Above INR 10,00,000
30%
(for resident or non-resident below the age of 60 years)
Total Income
Tax Rate
Up to INR 3,00,000
NIL
INR 3,00,000 to INR 5,00,000
5%
INR 5,00,000 to INR 10,00,000
20%
Above INR 10,00,000
30%
(for individuals who are of the age of 60 years or more but less than the age of 80 years):
Total Income
Tax Rate
Up to INR 5,00,000
NIL
INR 5,00,000 to INR 10,00,000
20%
Above INR 10,00,000
30%
(for individuals of the age of 80 years and above)
Cess
Surcharge
Rebate
An additional 4% Health and Educational Cess will be applicable to the tax amount calculated in the above 3 categories.
10% of Income Tax when total income exceeds INR 50,00,000 and 15% of income tax when total income exceeds INR 1,00,00,000.
An individual (resident) is entitled to rebate under section 87A if his total income does not exceed INR 5,00,000. The amount of rebate shall be 100% of income-tax or INR 12,500, whichever is less.
Finance Minister, in her Budget Speech 2020 had introduced a New Tax Regime. Individuals and HUFs can choose between the two regimes. Taxpayers can inform their deductor about the choice of the regime. This lets the deductor deduct the accurate TDS.Here is a table showing the Old Tax regime vs New tax Regime.
Note: Individuals opting for the New Tax Regime and having net taxable income up to INR 5 lakh will be eligible for a rebate up to INR 12,500 under both the tax regimes.
2. Form 26AS – Form 26AS is a consolidated Tax Credit Statement which provides the following details to a taxpayer:
Details of Tax Deducted at Source (TDS) from the taxpayer’s income
Details of Tax Collected at Source (TCS) from taxpayer’s payments
Advance taxes, Self-Assessment taxes, and Regular Assessment taxes paid by the taxpayers
Details of the Income Tax Refunds received during the year
Details of any high-value transactions (for eg. Shares, Mutual Funds, etc.).
It is a very important document to have while filing ITR. However, you would not want to miss out on tax credits while filing ITR. You can download Form 26AS from the Income-tax e-filing website. The file that the user’s download is password protected. Form 26AS passwordis the D.o.B (Date of Birth) of the deductee. Read all about it over here.
3. Form 12BB – Form 12BB (Investment Declaration)is an essential document for a salaried person. It is basically a disclosure of all their tax-saving investments in that particular Financial Year. Form 12BB is required by the employer for an accurate calculation and deduction ofTDS on salary income. It needs to be submitted at the beginning of every financial year.
4. Link PAN and Aadhar Link – The government has made it mandatory to link PAN and Aadhar. Also, according to Section 139AA of Income Tax Act, Aadhaar details is mandatory to successfully file ITR.
5. Home Loan Statements from Bank/NBFC – This statement will provide the break-up details of how much principal and interest you’ve paid. The interest paid on the home loan can be claimed under Section 24. The maximum amount one can claim under section 24 is INR 2 lakh.
6. Capital Gains – If you have gained from the sale of property/mutual funds or if you are a trader, then you will have to report such gains. On the sale of the property, you need to have the purchase and sale deed of that property. In the case of capital gains, statements from mutual fund houses/brokers can prove to be important.
Consolidated Capital Gains statement from CAMSandKARVY.
7. Tax Saving Investments – If you have claimed tax deductions under any section of the Income Tax Act, it is important to have the statements for the same. Although it is not mandatory, it might come in handy.
The most common available tax breaks under section 80Care as follows: a) Employees Provident Fund (EPF) b) Public Provident Fund (PPF) c) Investments in ELSS schemes of mutual funds d) Life insurance premium paid e) National Pension System (NPS) etc.
Prime Minister Narendra Modi launched the platform for ‘Transparent Taxation – Honoring the Honest’. The aim is to ease compliance by making the tax system, “People-Centric & Public Friendly” & issue refunds faster to benefit honest taxpayers.
The Tax reforms are promised to change how we pay taxes by making the process:
The number of taxpayers in the country is quite low at a mere 1.5 cr. As a way to celebrate honest taxpayers, from 2016 the Income Tax department is also issuing a certificate of appreciation.
But, seems like that wasn’t enough. Therefore, to increase tax compliance, it was needed to ease the process. And as a step closer to that ‘Transparent Taxation’ is launched.
That will be all folks. The tax season is around the corner. And we are here to simplify compliances for you. If you have any questions regarding taxes, drop your query in the comments section below or ask us anything on Tax QnA thread here.
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Did you know: Filing taxes early has its own benefits? you’re likely to get your tax refund faster!
All set? E-file your taxes instantly from the comfort of your home. As promised – no more paperwork, no more hurried visits, no more hassle.
Once you have successfully efiled your ITR, you’ll have 120 days from filing to e-verify your return!
We just want to part by saying – these are trying times. But, it all comes down to what you make of it. And we just wanted to make a part of your life better.
We are here to simplify your taxes. We will keep at it.
Prime Minister Narendra Modi launched the platform for ‘Transparent Taxation – Honoring the Honest’. The aim is to ease compliance by making the tax system, “People-Centric & Public Friendly” & issue refunds faster to benefit honest taxpayers.
“When the life of an honest taxpayer of the country becomes easy, he moves forward and develops, then the country also develops and leaps forward.“
PM says when the praising the taxpayers
The Tax reforms are promised to change how we pay taxes by making the process:
‘Painless, Seamless, Faceless’
PM describing the New Tax Reforms
The number of taxpayers in the country is quite low at a mere 1.5 cr. As a way to celebrate honest taxpayer, from 2016 the Income Tax department is also issuing a certificate of appreciation.
But, seems like that wasn’t enough. Therefore, to increase tax compliance, it was needed to ease the process. And as a step closer to that ‘Transparent Taxation’ is launched.
So, what is the Faceless Tax Assessment?
The scheme looks to eliminate the interface between taxpayers and the Income Tax Department. The Faceless e-Assessment scheme announced in 2019, will be part of this scheme under the Honoring the Honest campaign.
Here’s are some of it’s features:
The case selection will be through the system using data analytics & Artificial Intelligence
Automated random allocation of cases
Abolition of Territorial jurisdiction
Central issuance of notices with Document Identification Number (DIN)
Team-based assessment & reviews
No physical interface, meaning no need to visit Income Tax office
Faceless Appeals
Appeals under this system, are randomly allotted to any officer from across the country. Moreover, the officer’s identity will remain unknown.
The appellate decision will be team-based and the appeals will be reviewed.
Exceptions
The benefits of Faceless Tax Assessment and Appeals do not apply to cases relating to:
As bright as it looks for the taxpayers, the Tax officials are pushing back. A letter review by Reuters indicates the officials are not completely on board due to the lack of consultation and inadequate resource to implement the changes.
The letter was sent jointly by the Income Tax Employees Federation and the Income Tax Gazetted Officers’ Association expressing their displeasure to the Central Board of Direct Taxes (CBDT) this month.
Tax officers told Reuters that faceless tax assessment may reduce tax collection, which in turn may raise pressure on officers to meet tax targets for the current fiscal year.
What is in it for you?
Transparent taxation is launched to ease compliance & treat taxpayers as honest. The taxpayers’ charter is committed to respecting taxpayer’s privacy, holding authorities accountable for their actions and reduce the cost of compliance.
Here’s what you can expect:
Easy tax compliances
Faster refunds
Faster appeal resolutions
No more visits to the Income Tax offices
Using technology, the government aims to make tax compliance easier.
Don’t forget, Quicko is here to simplify taxes for you too. 😉
