A complete guide on filing your Income Tax Return in a correct way
Filing your tax return is just around the corner, and for the majority of us, we have no idea how to do the same. If you are looking for a proper guide to filing your ITR, this is just the right article for you. Here you shall get all the answers for tax-related queries and how to find possible solutions for the same. Here is a list of some of the questions for ITR that we all have in our minds. Dig deeper into the abyss, and you shall find the answers you want.
Do’s and don’ts one need to know related to income tax return
Income tax services in India can be pretty confusing at times. But make sure to understand that your ITR meticulously year after year creates your financial record which can help you in the long run. Be it a financial loan or something for personal use; your ITR works as a testimony in order to opt one. Let’s take a look at some of the dos and don’ts one need to keep in mind for a hassle-free ITR filing:
- One should be aware of the tax slab they fall under. While knowing your annual gross income, you can calculate your tax slab.
- Make sure to choose the right ITR form, as several changes have been made by the Income Tax Department of India by this year.
- Your taxable income, along with relevant details, should always be in disclosed and reported.
- Keep track of all of your TDS records.
- Never provide incorrect information for the relevant documents that are required to file your ITR. Not only it will cause a delay for your ITR to process, but you might also have to pay a hefty penalty for wrong information.
- For all the investments that have been made in the financial year, make sure to mention the same while filing your ITR.
- Your tax liability can be lowered up to a certain extent only by claiming the deduction.
- Never overlook the late fine and penalty fees for late submission of your tax filings.
Filing ITR after a gap of two years
There are several instances where a person might miss filing their ITR in the past couple of years. For some, they might have been unemployed, or others who have never filed their ITR before. Whatever be the reason, there are several instances where a person might have a gap of one of two. Some individuals might even get a notice for the income tax department while others won’t.
But, truth to be told, there is certainly no need to panic under such circumstances. After all, the income tax department will never harass someone who is willing to pay their taxes. According to the recent CBDT circular, a taxpayer can complete their pending ITR V verification for the previous six years. So you can always make a fresh start this year, no matter if you have never filed your ITR or even missed out a couple of times.
10 documents your require while filing the ITR
While Filing ITR Returns, you need to keep track of some of the important documents in order to get rid of unnecessary hassles and penalties. Down below is a list of the ten documents that are must-have for filing ITR.
1. Form 16: For all the salaried persons, form 16 is one of the most important documents to keep track of. Basically, Form 16 is the TDS certificate that shall be issued to you by your employer.
2. Salary Slip: Salaried taxpayers are also required to provide general information regarding the allowance such as house rent and transport that are often taxable.
3. Form 16A/16B/16C: Let’s just not get into the technicalities of these forms. But it is important to keep track of the same for all the incomes that are generated apart from salary. These include selling of properties and so on.
4. Interest Certificates from Banks: All the interests that have been received from banks, post office and savings account are taxable.
5. Form 26AS: These are the consolidated statement of your annual tax. It includes all the relevant information regarding the taxes that have been deposited against your PAN.
6. Aadhaar Card: Always take into consideration that your Aadhaar card has the most crucial role to play with your ITR. As per the new rule, make sure to link your Aadhaar Card with your PAN card.
7. Capital Gain: Property sales and mutual funds are often considered as Capital gains against a person’s income. Make sure to keep track of the increment that you have gained for your capital.
8. Home Loan Statement: If you have taken any home loan from a bank or any other financial institute, make sure to collect the loan statement.
9. Tax-saving Investments: Some of the tax-saving investments include PPF, EPF and Fife Insurance Premiums.
10. Section 80D to 80U: Apart from the investment plans, there are certain aspects where you can claim a deduction for certain expenses. Keep track of the same for certain deductions from your ITR.
Bank accounts and ITR
With all the linking processes going around, you might wonder, whether you need to report all of your bank accounts or not? While it might seem like one will do the job, as everything is linked to one another, but that is certainly not the case. As of last year, it has been made mandatory by the government to list all of your bank accounts in the ITR form. That being said, you won’t need to list all the inactive accounts given for the time period they have been lying dormant.
Generally, for the majority of the case, an account can be considered inactive if it has not been used for 12 months. Now if there is any fixed deposit or dividends associated with the same account, it is always considered to be operational. Under such circumstances, it needs to be inoperative for the next two years to be called as inactive. So, without going into such complications, it is always advised to mention all of your bank accounts.
Hassle-free ways to manage your Income Tax Return
We all understand how income tax returns can be tedious at times. Here is a list of some of the ways one should take into consideration regarding your ITR return:
1) File your ITR on time
This is one of the most novice tips one can come up with. Yet the majority of us overlook the same. In order to avoid any penalty, taxpayers and HRs should keep in mind to file their ITR before the due date. This is especially advantageous to the people who have a severe business loss and cannot carry forward the same.
2) The clear understanding of Tax Sales and their Rates
It is very important to be accustomed to all the tax slabs and their interest rates so that you can properly evaluate your position. Make sure to keep track of the slab where you can get a rebate on your tax.
3) Disclosure of your Liabilities and Assets
This section is not for everyone, but for the people whose income exceeds more than 50 Lakhs, it is very important to disclose your liabilities and assets for full transparency. There is a separate schedule you can find in the ITR form.
4) Selecting the correct ITR form
Always select the correct ITR form while applying for tax returns. Without the correct form, the department cannot evaluate the right amount of tax that needs to be paid.
5) Cross-checking all the information
It is one of the most obvious points in order to get a hassle-free ITR filing. Make sure to cross-check, not once or twice but multiple times before submitting the ITR return.
Due Tax after Deducted TDS
There is no arguing over the fact that there are several instances where there is a due tax even after getting your TDS deducted. Even the banks nowadays have started to credit interests after deducing taxes. And apart from that, you don’t even have any extra source of income.
This is one of the biggest confusion among taxpayers, especially for the salaried. Now, there is a trick to understand over here. For the majority of the time, TDS deducted by the employer is at 10%. And the same goes for your bank. Now. If you are falling into a different tax slab, there is still some outstanding income tax that needs to be paid. That is what creates all the confusion. So, the next time you are about to file your ITR, make sure to know your tax slab under which you fall. This can give you a vivid idea of how much tax you shall be paid.
Common mistakes the HRs make while filing the ITR
The HR managers in any organization play one of the most important roles while managing the payrolls of the employees. That being said, here is a list of some of the common mistakes that HR makes while filing ITR:
- With the new 2020 union budget, HR needs to keep track of the new tax slab as well as the old ones.
- While this might be of convenience for the company’s employee, it is certainly one of the mistakes HR shall make regarding the choice of the tax slab.
- Apart from the taxation slab, HR needs to keep a track of the tax exemptions that the employees can avail.
- Without the proper knowledge of LTA and HRA, HR ends up making more payments to the employees.
Understanding successful ITR filing
As we have advised before in the article. It is very important to submit your ITR before the due date. This is mostly because, within the last few days, the servers are always overloaded. So, make sure that you get an acknowledge number from the Tax Department. This acknowledge number ensures that you have successfully submitted your income tax return. That being said, if you don’t receive the same, it is time to cross-check and refile.
What to do after an Erroneous Return?
As we have discussed earlier, if you have created an error during the time of filing, you are always allowed to revisit and make certain changes to it. This can help with making any further errors. Under section 139 (5), you can always get your files revised with the correct particulars. So, no need to worry about the same. No matter the error, they can still be rectified if found at the right time.
To sum it up
While drawing a conclusion to the above-discussed article, all the topics cover some of the most important aspects one needs to know while filing their income tax returns. Once you get everything right, it is guaranteed that you will experience a seamless tax filing like never before.