As the end of any Financial Year approaches, we all start getting worried about filing returns and taxes. Tax season has always been seen with fear, stress and tensions by Taxpayers. But preparing for taxes and filing tax returns don’t have to be full of hassle.
While after the year ends, you will be busy in collecting necessary information and documents related to Return Filing from your employers, Bankers, and other Income sources to fill and file returns, there may be a chance that certain points are missed unknowingly.
As we all know Return Filing season will be here soon. Here are few tips to ensure that your returns correctly and in a hassle-free manner:
Choose the Correct Form:
Due to a lack of knowledge, most of us choose the wrong form while filing the return. Forms are categorized on the basis of the Nature of Income and income limit. It is beneficial to file your returns through a tax filing platform, as they automatically choose the appropriate form based on the income details provided by you.
Let’s understand Various ITR forms & their relevance in brief:
- ITR 1 is for Resident individuals having Salary or Pension income, Single House Property and Income from Other Sources.
- ITR 2 is for Individuals as wells as Hindu Undivided Family(HUF) who have income more than INR 50 Lakhs, Income from More than one House Property, Capital Gain Income, Or is a Director of a Company holding Investments in Unlisted Shares and/or having Foreign Income/Assets
- ITR-3 can be filed by nearly everyone as it covers all sources of income and situations, but it is generally applicable to those who have earned income from a business or by pursuing a profession or as a Partner in a Firm.
- ITR -4 is for Individuals, HUF’s and Partnership Firms being Resident having income up to 50 Lakhs. It also covers people who have Income under the Presumptive Tax Scheme.
Report all the details of Income including Foreign Income:
It is very important to declare all the sources of Income in our return including the details regarding the incomes earned abroad as well as bank account details if any held abroad.
Exempted Income like the interest on PPF, dividends, Matured insurance policies, Agriculture Income also needs to be declared in the ITR. One needs to ensure that there is no omission or misreporting of any details.
We are listing some of the Income that is left out mistakenly:
Interest on Fixed Deposits as some does not count it to be taxable.
Income from Investment made in the name of the Children. These Income are to be considered in the return of either of the Parents.
Income from the Previous Employee, in case you made a switch in the middle of the Financial year.
Interest on Savings Account of up to 10000 is not taxable but it should be reported in Income Section & then claimed as Exemption under Deduction
Claim Deductions in a Proper Manner:
There are many ways to claim the deduction; Some deductions are to be claimed in the Specific Income Section Only like Standard Deduction in case of Salary, House Property, Interest on Housing Loan. However, Deductions like LIC, Principal Amount of Housing loan & Such other Deductions as mentioned in Chapter VII are to be claimed. To get the credit of all your investment, One must report & fill the details correctly. Deductions claimed wrongly by providing false information or claimed under the wrong head may lead to rejection of the claim and an increase in tax liability.
Also, Save all the papers and keep proof ready in case there is any notice for the requirement from the Income Tax Department.
Filing Return & Paying Taxes on time:
Even if your income is below Taxable Limit, you must consider filing a Nil Tax Return for the purpose of maintaining records.
Many of us have income from sources where TDS is not applicable. Sometimes due to Switch in Job & investments also brings a change in taxes payable. Individuals must pre-assess their taxes so if there is a tax liability, the same must be paid either in the form of Advance tax or self-assessment tax as the case may be. This will help us save the penalty or interest liability that may arise on not paying taxes on time.
Further, Filing return on time allows the processing of returns on time as well as getting refunds on time. Not only this timely filing of returns also saves us from facing penalties & interest Liabilities.
Quote the Right Details & Sign the return properly:
Be careful when you are entering your PAN Number & Banks Details in Income Tax Return. A mere mistake in entering the details can result in complications. Your Return will be rejected in case of the Wrong PAN or your refund may delay in case bank details are incorrect.
Uploading of return alone does not mean the return filing process is complete. It is mandatory for you to verify your return to complete the process of return filing.
If you have not digitally signed your return while e-filing IT return, Return has to be E-verified. Following are the different ways to verify the return electronically:
• Via net banking
• Via Aadhar OTP
• Via Electronic Verification Code on the Income Tax Department Website
In case the return is not e-verified, it is mandatory to send a duly signed ITR V to CPC Bangalore by ordinary or speed post only within 120 days of uploading of return. One must Sign the ITR V in blue or black ink in the box provided. Please note, a return can be verified and signed by the individual himself or any person authorized.
If we keep all these small but important details in might while preparing and/or filing our returns, we can smoothen our return filing process and avoid any kind of delays in processing as well as Penalties.