Income Tax: The deadline to file an income tax return (ITR) for FY 2024-25 will expire on 15 September, less than one month from now.
The Income Tax (I-T) Department has released the excel utilities for all the ITR forms from ITR1 to ITR6. It is now incumbent upon taxpayers to file the correct tax return and accurately report their income and assets, while avoiding under-reporting.
There are a number of points which taxpayers need to be careful about.
Salaried taxpayers: Be aware of these key points
I. Choosing the right regime: When filing an income tax return (ITR), taxpayers need to use an income tax calculator to find out which tax regime leads to a lower tax rate. Sometimes, they choose the regime they chose last year without realising the impact on their tax outgoings.
“Oftentimes, salaried taxpayers opt for the old tax regime because their Form 16 has followed that. But they must understand that when deductions are less (say, lower than ₹4 lakh), then the new tax regime leads to lower income tax. If they follow the new regime, they could even get a tax refund. So, it is better to use an income tax calculator before choosing a regime,” says Chirag Chauhan, a Mumbai-based chartered accountant, who runs CA Chauhan & Co.
II. Avoiding under-reporting of income: Another mistake that taxpayers make is to compute LTCG (long-term capital gains) based on the old tax rate (10 per cent) instead of the new rate (12.5 per cent) which came into force on July 23, 2024.
III. Correct reporting of foreign assets: Another mistake that taxpayers tend to make is to hide or wrongly report their foreign assets/income.
“Oftentimes, taxpayers report foreign ESOPs wrongly. For example, salaried persons assume that reporting these (foreign ESOPs) under the category of salary perquisites is sufficient instead of reporting under the ‘Foreign Assets’ schedule. But it is incorrect. Another non-compliance often seen is the non-reporting of the asset-liability schedule. Additionally, if you own foreign assets, you must file ITR-2, which is a slightly complex form. This is perhaps another reason that salaried taxpayers – owning foreign ESOPs — choose to ignore it and report it under salary perquisites,” says CA Pratibha Goyal, partner, PD Gupta & Company, a Delhi-based CA firm.
IV. Other crucial information: Additionally, taxpayers should avoid concealing crucial facts which have an impact on their tax filing status. For example, if a taxpayer is a director in a company, then they must use ITR4 to file the return. “Sometimes taxpayers own physical shares or securities in an unlisted firm, but they must reveal such investments too,” adds Chauhan.
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