The first and foremost thing is the correct selection of the return form on the basis of the status of the tax payer.
It’s that time of the year again when you have to file your income tax return. While the process may be tedious but that doesn’t mean it is not important. Filing income tax return is essential to prove that you have a source of income which helps you a long way while taking a loan or applying for a VISA. Given its importance just keep the following points in mind so that you do not commit any mistake while filing the income tax return.
1. Correct return form to be filed: Selection of correct return form is the first and foremost thing while filing returns. Aseem Chawla, Managing Partner, ASC Legal says-”The first and foremost thing is the correct selection of the return form on the basis of the status of the tax payer being individual, Hindu Undivided Family, partnership firm etc, source of income and whether any asset is situated outside India”. Out of these, ITR 1 to ITR 4 are applicable to individuals/HUFs, while ITR 5 is for partnership firms and LLP, ITR 6 is for companies. Each form depends on the individual situation. So, keep in mind that if you forget to give correct information, it will reject your file returns and will be declared failed from IT department. Try to take help from experts and select the right tax form.
2. Give all your basic information carefully and correctly: Your information like Permanent Account Number, name, date of birth, address, bank account details, etc. should be carefully entered while filing tax return. The personal details to be entered while filing the tax return should match the details with the PAN database maintained by the income tax department, So, be careful, a single mistake will make your tax return invalid. “Bank account details should be entered correctly so as to receive the refund of taxes properly by way of credit in the bank account” opines, Chawla.
3. Credit of tax deducted at source: Credit of tax deducted at source on the income earned during the year should be taken while calculating the overall tax liability. The assessee should verify tax credits available in Form 26AS/NSDL in taxsmile.com website. Mismatches are the single largest cause of incorrect tax computation. Non credits may be taken up with the TDS deductions and/or the banker as soon as they are noticed.
4. Do report interest income from all sources: Income from fixed deposits, savings account interest and recurring deposits are must to mention while filing tax return. Archit Gupta, Founder and CEO, www.taxsmile.com says-”Do remember to report interest income from all sources such as fixed deposits, savings account interest and recurring deposits interest. All of these are taxable. Deduction under section 80TTA of maximum Rs 10,000 is allowed on savings account interest and must be claimed via your tax return”.
5. Foreign assets and foreign income: “If you hold any foreign bank accounts, foreign retirement accounts, or any other assets like shares of a company listed outside India and your status is resident for income tax purposes, it is mandatory for you to report all your foreign holdings by filing a tax return, irrespective of whether you have taxable income or not.” adds Gupta. The resident sssessee having any income from any source outside India should disclose the same in the relevant schedule of the relevant income tax return form. “The foreign source income should be converted into Indian currency at the rate of exchange mentioned in the tax rules. The resident assessee should also disclose all the assets owned and maintained by him/her outside India.” opines Chawla.
6. New schedule of assets and liabilities: Don’t forget to disclose the cost of movable assets (vehicles), cash in hand, jewellery, bullion and immovable assets such as land and building, in case the income of the assesse exceeds Rs. 50 Lakhs rupees. The same has been introduced to capture the detail of the assesse in light that the Wealth Tax Act has been abolished. So, be alert while mentioning all your assets and liabilities. “If you invest in equity shares or mutual funds, do report your gains or losses. Short term gains are allowed to be carried forward and set off in future years and therefore you must report these in your tax return.” Adds Gupta.
7. Arrears and Form 10E: If you have arrears you can claim tax relief on arrears under section 89(1) of the income tax act. However, do remember to file Form 10E. It is compulsory to file Form 10E if you are claiming tax relief. Otherwise, your tax return filing will not be valid.
8. Forget to mention retirement benefits: If you have recently retired and have earned a large income from gratuity/PF or any other retirement benefits, which are exempt from tax. Remember to report these under exempt income. Gupta says-”This will help explain any investments or income you earn from them. If these exempt incomes are invested in fixed deposits, any interest earned from them is fully taxable”
9. E-verify your tax returns and send ITR-V: ITR filing is not enough; you have to verify your tax returns or send it to ITR-V to CPC Bangalore. Don’t forget to verify your returns. The tax department will not process your ITR and you have to again file your income tax return. So, it is very important to send your copy to IT department after online filing to avoid any hassles. Verification is must and there are online verification options available while filing tax returns online. Do keep in mind all the steps and avoid mistakes.
So, keep all the above points in your mind and file your tax returns carefully to avoid any mistakes. One single mistake can make your tax filing invalid by IT department. Last but not the least, if you are new to file tax returns, then do take the help of experts and advisors before filing. This will surely help you to file tax returns in a better way.