This article has a list of important factors to consider when submitting an ITR:
- Select the appropriate ITR form.
Selecting the appropriate ITR form based on the taxpayer’s residency status and income from numerous sources is crucial for accurate filing. For example, a resident individual with total income up to Rs 50 lakh from wages, one residential property. and other sources can only utilise form ITR-1.
Also Read: Income Tax Return Filing
- Choose between the new and old tax systems, depending on which is more beneficial.
In lieu of renouncing mandated exemptions and deductions, the Finance Act of 2020 created a new optional tax regime for taxpayers with modified tax slabs and rates. During the tax return filing process, taxpayers will be able to choose between the existing and new tax regimes. Salaried taxpayers can also amend the tax regime they declared to their employer when completing their ITR.
- ITRs with pre-filled information
This year, ITR forms will import pre-fill information from the Form 26AS, such as the taxpayer’s personal information and details of salary income, dividend income, interest income, and capital gains. The majority of the essential information would already be provided, making ITR filing easier for taxpayers.
Individuals will need to double-check this information and make any necessary adjustments for income not declared on the tax return.
If the information is incorrect, you should contact the bank/income payer, etc., and request that the data in their quarterly TDS returns/other files be changed so that the correct information appears on your Form No. 26AS.
- To verify prepaid taxes, use Form 26AS.
Taxpayers can check their prepaid taxes, such as tax deducted at source, advance tax, and self-assessment tax, using Form 26AS.
- Payment of outstanding taxes
After estimating total taxable income and claiming necessary deductions under Chapter VI-A of the Act, the total tax owed should be computed using applicable tax rates. After claiming credit for prepaid taxes. Before submitting the tax return, you should pay all taxes owed, including any applicable interest.
- Various disclosure obligations
An ITR must include the following disclosures of various assets and financial investments:
- Detailed information on all Indian bank accounts
- Specific information about unlisted equity shares
- There is a list of the board of directors of Indian and foreign corporations.
- Exempt Income Reporting
Agriculture income, minor children’s exempt income, income not subject to tax under the Double Taxation Avoidance Agreement, and other exempt income must be reported on ‘Schedule EI.’
- Changing jobs during the year
If the taxpayer has provided the present employer with the necessary wage and income details from previous employers. Otherwise, there may be a TDS shortage due to the duplication of slab benefits, deductions, and exemptions offered by all employers. Any additional taxes payable on the return.
- In some circumstances, an ITR is required.
The Finance (No. 2) Act of 2019 forced ITR submission for select persons who met certain conditions during the relevant fiscal year. Even if they were exempt from filing an ITR because of taxable income. If they engage in high-value transactions within the relevant fiscal year, they must provide the following information:
- Payment of almost Rs 1 lakh worth of electricity bills;
- A total deposit of above Rs 1 crore in one or more current bank accounts;
- In total, I spent more than Rs 2 lakh on overseas travel for myself or others.
- Consequences of not filing an ITR on time
The taxpayer may be unable to file the ITR before the due date for a variety of reasons, including a lack of essential documents/information. A lack of time, personal obligations, and so on. Including the imposition of a late filing charge, Ineligibility to carry forward some losses. Payment of interest on the balance tax liability, and so on.
To summarize, taxpayers should estimate their taxable income in accordance with the Act’s provisions and verify all underlying documents/information before computing the final tax payable / refundable, as applicable. In doing so, they should consider the aforementioned factors, among others. In order to file their ITR correctly and avoid any penalties.
Suggested Read: Income Tax Advisory services