WHICH ITR SHOULD I FILE FOR F.Y.2016-17

It is time to file your income tax return (ITR) & in move to make the tax filing process more convenient, The Central Board of Direct Taxes (CBDT) has redesigned the ITR forms for financial year 2016-17.

All ITR forms would have a dedicated column seeking details of any cash deposit exceeding Rs. 2 lakh during the demonetization drive between November 9, 2016 and December 30, 2016. For those claiming Home Loan interest deductions under Section 80EE, there is a new field added in all ITR forms under Schedule VI-A.

The government also mandated quoting of Aadhaar number while filing the tax return .

Here is all that you need to know to file your tax returns successfully.

ITR -1 – SAHAJ: FOR SALARIED INDIVIDUALS

This form can be used if you have

  • Salary or Pension Income having total income up to 50 lakh.
  • Income from One House Property (excluding cases where loss brought forward from previous year)
  • Agriculture income which is less than R.5000
  • Income from Other Sources like FD/Shares/NSC etc (excluding Winning form Lottery and Income From House Race)

One significant change this year is that the new ITR Sahaj form is compressed into a single page with dedicated sections for deductions under section 80C, 80D, 80G and 80TTA.

ITR- 2: FOR INDIVIDUALS AND HUF NOT HAVING INCOME FROM BUSINESS OR PROFESSION

The ITR 2, ITR 2-A and ITR-3 forms have all been converted into 1 single form and renumbered as ITR 2.

  • Salary or Pension Income
  • Income from Multiple Houses
  • Income from Capital Gains
  • Income from other sources (Including Winning from Lottery and Income form Race Horses.)
  • Income of a person as a partner in the firm.
  • An asset in foreign country or income from a source outside India.
  • Agriculture income which is more than Rs.5000.

Further, in a case where the income of another person like one’s spouse, child, etc. is to be clubbed with the income of the assesses, this return form can be used where such income falls in any of the above categories.

ITR-2 A: FOR INDIVIDUALS AND HUF NOT HAVING INCOME FROM BUSINESS OR PROFESSION AND CAPITAL GAINS AND WHO DO NOT HOLD FORIGN ASSET

This tax return form has been discontinued in FY 2016-17.If you have filed ITR 2A in FY 2015-16, then you should file ITR 2 now for FY 2016-17.

 ITR- 3: FOR INDIVIDUALS AND HUF BEING PARTNERS IN FIRM BUT NOT CARRING BUSINESS UNDER PROPRIETIRSHIP.

The old ITR-4 tax form has been renamed ITR-3.

ITR – 4: FOR INDIVIDUALS AND HUFs HAVING INCOME FROM A PROPRIETORY BUSINESS OR PROFESSION.

The old ITR-4S tax form has been renamed ITR-4. If you’ve e-filed an ITR-4 for FY 2015-16, then you must file an ITR-3 now.

The current ITR 4 is applicable to individuals and HUFs having income from a business and profession and who have opted for the presumptive income scheme as per section 44AD, Sec 44ADA and Section 44E of income Tax Act. However, if turnover of business exceeds Rs 2Cr, the tax payer will have to file ITR 3

ITR- 4S (SUGAM) : FOR INDIVIDULAS /HUF/PARTNERSHIP FIRMS HAVING INCOME FROM PRESUMPTIVE BUSINESS

This tax return form has been discontinued in FY 2016-17.If you have filed ITR 4S in FY 2015-16, then you should file ITR 4 now for FY 2016-17.

ITR-5: FOR FIRMS, AOP’s, and BOI’s

This forms can be used by Firms, Co-operative Banks, Co-operative Societies, Limited Liabilities Partnership (LLP), Association of Persons (AOP), Body of Individuals (BOI), Artificial Judicial Persons.

Applicable for all sources of Incomes.

ITR-6:  FOR COMPANIES OTHER THAN COMPANIES CLAIMING EXEMPTION UNDER SECTION 11

Companies other than companies claiming exemption under section 11 are those whose income from property is held for charitable or religious purposes.

ITR -7: FOR PERSONS INCLUDING COMPAIES REQUIRED TO FURNISH RETURN UNDER SECTION 139(4A) 0R 139(4B) OR 139(4C) OR 139(4D) OR 139 (4E) 0R 139(4F)

139(4A) – To be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purpose.

139(4B)- To be filed by a political party it the total income without giving any effect to the provisions Section 139 A exceeds the maximum amount that is not chargeable to income tax.

139(4C) – To be filed by every scientific research association, news agency, association or institute referred to in Section 10(23A), Section 10 (23B).fund or institution or university or educational institution or any hospital or other medical institution

139(4D)- To be filed by every university, college or other institution, which is not required  to furnish return of income or loss under any other provision of this section.

 

 

MUTUAL FUNDS FAQs

What is mutual fund?

A mutual fund is essence of Trust with a sponsor. They are registered with SEBI who approves the Asset Management Company managing the funds. In other words mutual fund is a mediator that brings together a group of people and invest their money in stocks, bonds and other securities.

What are benefits of investing in Mutual fund?

  • Professionally managed: The pool of money collected by mutual fund is managed by professionals who possess considerable expertise, resources and experience .Through analysis of markets and economy, they help pick favorable investment opportunities.
  • Diversification: Since funds invest in number of securities risk is diversified.
  • Flexibility: Investors can benefit from the convenience and flexibility offered by mutual funds to invest in wide range of schemes.
  • Low Transaction Cost: Due to economies of scale, mutual funds pay lower transaction costs. The benefits are passed to mutual fund investors, which may not be enjoyed by an individual who enters the market directly.
  • Regulations: All the mutual funds are registered with SEBI and complete transparency is enforced.
  • Easy to track: Mutual funds provide a clear statements of all investments which makes it easy for investors to keep a tab on.

 

Can I Invest Lump sum amount in mutual funds?

Yes you can invest

What is Systematic Investment Plan & How does it Work ?

Systematic Investment Plan (SIP) which is a systematic method of investing your money. In other words SIP is a planned approach towards investments and it helps you to develop the habit of saving and building wealth for the future. Best part is you can participate in SIP by investing minimum of Rs.500/- or more either on monthly or quarterly basis.

SIP is flexible and easy investment plan & conceptually similar to a recurring deposit where by a fixed investment is made on a regular basis. Your money is auto debited from your bank account and invested into a specific mutual fund scheme. You are allocated certain number of units based on the ongoing market rate called NAV for the day. Every time you invest money, additional units of the scheme are purchased at the market rate and added to your account. Whenever you make an investment in a mutual fund scheme, the fund house has to send you an account statement providing details of holding.

Can I do additional purchase or increase amount of SIP?

Yes. You can do additional purchase and increase your SIP amount also in the same folio or scheme.

Is there any lock in period?

Only ELSS mutual funds (Tax Savings) have 3 years lock in period. Other mutual funds don’t have any lock in period but if you redeem your mutual fund before 1 year there is 1 % exit load.

What are investments options available in Mutual Funds?

Growth

Dividend is not paid out under a Growth Plan and the investor realizes only the capital appreciation on the investments (By increase NAV)

Dividend Payout Option

Dividends are paid out to investors under this option. However, the NAV of the mutual fund scheme falls to the extent of the divined payout.

Dividend Reinvestment Plan

Under this option dividend accrued on mutual funds is automatically re-invested in purchasing additional units.

How much returns can I expect from my mutual funds?

The returns are not fix because as you invest, units are allocated as per on going market rate called NAV & it fluctuates depending on the time of investment, economy’s condition and other factors

Returns on investment also depends on types of mutual fund and your investment tenure. Eg. Equity funds gives better return in long term and debt fund gives better return in short term.

What are different types of Mutual Funds?

Equity Funds

The aim of equity funds is to provide capital appreciation over the medium to long term. Such funds invest major part of their corpus in equities. These funds have comparatively high risks. There are different types of equity mutual funds such as Sector Fund, Index Fund, ELSS Fund & Diversified funds.

Debt /Income Funds

The aim of Debt funds is to provide regular and steady income to investors. These funds invest predominantly in high rated fixed income bearing instruments like bonds, debentures, government securities, commercial papers & money market instruments.  Debt funds are less risky compare to Equity mutual funds & best suited for the medium to long term investors who are averse to risk & seek capital preservation.

Liquid /Money Market Mutual Funds

These schemes invest exclusively in safer short term instruments such as treasury bills, certificate of deposit, commercial papers, and government securities, etc. The period of investment could be as short as a day.

Balanced Funds

The aim of balanced funds is to provide both growth & regular income. These funds invest both in equity & debt in the proportion indicated in their offer documents. Such funds are appropriate for investors looking for moderate growth.

Gilt Funds

These funds invest in Central & State Government securities & best suited for medium to long term investors. Since they are Government backed bonds they give a secured return and also ensure safety of the principal amount.

 What are documents to be submitted along with application form?

Every person shall quote his PAN and enclosed KYC acknowledgement letter issued by the KYC Registration Agency for all investments irrespective of amount involved for purchase of units

 

What is know your customer?(KYC)

It is one time exercise while dealing with securities markets – once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund, etc. )you need not undergo the same process again when you approach another intermediary .This entitles  In-person Verification (IPV),verification of identity and address, financial status, occupation and such other information as may be prescribed by guidelines , rules & regulations.

You can know your KYC status:

CVL KRA

NSDL KRA

CAMS KRA

NSE KRA (DotEx)

KARVEY KRA