In Budget 2020, the government introduced a new tax regime that reduces income tax rates but requires letting go of almost all deductions and exclusions against certain investments. This was introduced with an aim to simplifying tax filing for a large majority of Indians and encourage them to file ITR online without any professional help.
For most taxpayers in the country, tax filing on their own may be not-so-difficult, especially with the introduction of auto-filled segments in these forms on Central Board of Direct Taxes' official website to file returns.
However, those with multiple sources of income, a complex break-up of salary, business or professional income may need help from a chartered accountant to seek appropriate tax deductions and comply with income tax rules. These professional tax experts also help you plan your taxes for the current and upcoming years.
How much does it cost?
If your total annual income is less than Rs 50 lakh with your source of income being limited to salary/pension, interest and rent from one house property, you can file your income tax for free if you are familiar with tax rules.
There are also online tax filing assistance options available that allow you to file your taxes for a nominal charge by just uploading your form 16 and other TDS certificates.
Those with higher annual income and other sources of income like capital gains, dividend income and rent from more than one house property, can seek professional assistance for less than Rs 1,000.
If an individual has income from foreign assets, professional help is definitely required and the costs of the service could go as high as Rs 5,000.
For those with business income or income from professional services (doctors, lawyers, artists), fee on professional assistance fee will be in the upper range as their income needs to be audited by a chartered accountant, as per the law. These services will cost over Rs 5,000 to 14,000, based on the complications.
Can you file income tax returns on your own?
Yes, it is possible to file ITR on your own if you have good knowledge of the current income tax rules. However, most individuals may find the details on income tax rules complicated because they are not regularly in touch with the changes in rules and tax filing dynamics.
Changes in the extent of deductions allowed on certain investments and other requirements change every year as per the Annual Union Budget presented by the Finance Ministry. This year, changes have also been made to the structure of Form 26AS and Form 16. There were also changes in taxation announced for dividend income.
While all of this information is available online via media outlets and even on the income tax department's website, it can be overwhelming for a taxpayer to read through all that and decide on it accordingly. Tax experts like chartered accountants are well versed in tax-related documentation, yearly updates and what will work for a particular individual.
Taxation is never one-size-fits-all as income of individuals vary and some years there are large receipts like after a LIC policy matures or income from the sale of a house. By hiring a professional, you will be assured that your ITR is error-free (avoiding notices from the Income Tax department) and also be able to plan your investments better.
Important tax dates coming up
- 30 September: Last day to file belated ITR for the financial year 2018-19
- 30 November: Last day to file ITR for the financial year 2019-20