By Preeti Kulkarni, ET Bureau | 5 May, 2014, 11.41AM IST | Economic Times
Salaried employees will start getting Form 16 from employers in next couple of weeks. They should start the process of filing returns right away, say experts.

With the last day for filing returns being July 31, I-T dept has already uploaded new ITR forms. ET lists the changes to help you complete the exercise easily.

Many individuals have barely finished their investment declaration to earn income tax (I-T ) breaks, and it is already time to think about filing tax returns. The last day of filing the returns is July 31.

This year, however, taxpayers will have to confront a new income tax return form. The I-T department notified the new income tax return (ITR) forms last month. Salaried employees will start getting their Form 16 from their employers in the next couple of weeks. They should start the process of filing returns right away, say experts.

“If you file your returns now rather than waiting till July, the chances of your tax refund, if any, being processed sooner is higher. Also, the e-filing site’s servers tend to be busy towards the end of tax-filing season, which could cause delays,” says Vineet Agarwal, director, KPMG India. ITR forms are updated every year. Salaried individuals can use forms ITR-1 (Sahaj) or ITR-2.

If you earn income from salary or pension, own no more than one house and have other sources income such as interest, you can use form ITR-1 (Sahaj). If you own multiple house properties or if your earnings include capital gains and other sources including winnings from lottery and horse-racing , the relevant form for you will be ITR-2.

You can claim deductions that you may have missed out on while submitting investment declarations to your employer. Here are a few changes in the forms you must be aware of:

Detailed Exemption Income

Until last year, tax-payers were required to declare their exempt income in a column provided in ITR-2 . Tax-payers just had to provide a consolidated figure — the total amount of tax exempt allowances . This time, however, they will have to provide more details.

“The new ITR-2 form requires the taxpayers to provide a detailed break-up of tax exempt allowances in the schedule S (for salary income),” says Vaibhav Sankla, director of tax consulting firm H&R Block.

Keep your Form 16 at hand before filing returns, as you may need it for the details. “You will have to separately provide the figures for, say, house rent allowance (HRA) and leave travel allowance (LTA),” says Kuldip Kumar, executive director , tax and regulatory services, PwC.

Break-up of Capital Gains

You will also have to provide a detailed break-up of capital gains made during the year. The new ITR-2 asks information on capital gains in several categories. “Capital gains are taxed at different rates depending on the nature, such as mutual funds, listed shares, unlisted shares; and type (short-term and long-term ) of asset sold,” says Sankla. He feels the new categories added to the capital gains section will ensure accurate tax calculation on capital gains.

Capital Gains on House Property

If you sell your house property after holding it for more than three years, you are required to pay a long-term capital gains tax of 20% (with indexation benefit) on the profit made.

However, you can avoid paying this if it is re-invested in another property or bonds issued by the NHAI or REC under Section 54. This year, ITR-2 seeks details of such transactions.

“Taxpayers now have to provide the details such as cost of the house or the amount invested in bonds, date of purchase and investment , amount deposited in the capital gains saving account scheme, if any, and so on,” says Sankla.

First-time Home Buyers

If you have purchased your first house property between April 1, 2013 and March 31, 2014, you are eligible for an additional deduction (over and above the Rs 1.5 lakh deduction under Section 24) of Rs 1 lakh on housing loan interest under Section 80EE. “This new provision has now made its way into the ITR forms, as expected. The new form includes a box for deduction of interest on housing loans taken by first-time homebuyers ,” says Agarwal.

Source : http://goo.gl/4dYB7Y