Filing Tax Returns in India - Made Easy !

I'm phobic to "standing in queues" - be it a theatre or a government office. I hate to stand in long lines, especially when things can be done from your home, over the internet, with the click of a mouse button. The thought of standing in long lines to file my tax returns made me nervous, in July. Thank God ! Indian government has brought a number of e-governance initiatives and "filing tax returns online" is one such initiative. (Also read: I love IRCTC.CO.IN)

I didn't have to file tax returns in India for the last several years, since I didn't have any income in India. The last time I filed tax returns in India, I had to stand in the queue for at least 2 hours to just submit the application and to get a stamped acknowledgment. I was thrilled to hear about the online service for filing tax returns. I initially envisioned it to be an equivalent of Turbo Tax or Tax Cut - but, it is no where close to those services. However, it is lot better than the hard copy "Saral form" that I filled years ago.

I got some tips from my colleagues and decided to file the tax returns online. All you need to do is download an Excel Spreadsheet, fill the relevant information from Form 16 and upload it online. You'll get an acknowledgment right away. In addition to doing this, you need to "mail" the hard copy to NSDL processing center. The process involved is very simple and you can complete it in just an hour or so. The refund amount gets automatically deposited in your bank account, if you provide bank account details. I was not eligible for any refunds and hence, couldn't validate that work flow. But, I heard that you DO get refunds from the IT department :)

In the past, I had to rely on my friends to understand the different fields in the Saral form. Having filed tax returns in US on my own, several times, I could now understand the fields easily. Moreover, the Excel Spreadsheet has lots of 'intelligence' built-in. It does all the basic checks that prevent you from entering wrong data.

Overall, I liked the online interface for filing tax returns. Someday, I want it to be as intuitive and easy as Turbo Tax / Tax Cut.

Also read:

Filing tax returns in US after your R2I - Some tips
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Filing Tax Returns in US after R2I - Some tips

It is that time of the year when we start to think about filing Tax returns in US. From what I have seen, people procrastinate filing tax returns until the last minute and finally, they do it in a hurry. If you have R2I'ed, you should start working on the Tax returns filing process much in advance. This would give you enough time to gather all the relevant documents and file tax returns.

What are the documents that you would need to file your tax returns? You need the proof of income from various sources such as work, investments, 401k closure, rental properties etc., You need to have proof for some of the deductions that you may claim such as US home loan interest, donations, investment losses, education/training expenses etc.,

When returning from USA, you should have given the change of address to all the concerned parties, so that they can mail you the income tax statement. Otherwise, you may have to chase each of them to send you soft copies by email. Hopefully, you gave the address of a friend who lives in his/her own house. That way, you don't have to worry about change of address when your friend shifts his/her house. Inform/remind your friend that he/she may receive your income tax statements from different sources. This will help them to keep an eye on it.

I just did my last US tax return. Thanks to Turbotax.com. The process was very simple and easy. If you have been using Turbotax in the previous years, don't forget to update your residency status for part year residency. You'll get some state income tax credit for that. If you had closed your 401k account during your R2I, you have to pay 10% penalty for your early 401k withdrawal, during the time of filing tax returns. Don't forget to save a copy of the tax returns documents to your PC and if possible, take some printouts of your tax returns for future reference.

When filing your tax returns, give your US bank account number and routing number for direct credit of the tax returns. Later on, you can transfer the money to your Indian bank account. If you are within the RNOR period (i.e., 2 years since your R2I), you don't have to declare this as foreign income when filing your tax returns in India.

I understand that filing tax returns is a time consuming process and you need to gather lots of details/documents. But, being an early bird helps to avoid the last minute anxieties.

Also read:

Filing Tax Returns in India - Made Easy
R2I Planning Guide - One Stop Shop
R2I - 401(k) closure FAQs