By adhering to straightforward tips and guidelines, taxpayers can guarantee accurate filing of their returns, thereby minimising the likelihood of queries from the income tax department and averting other related issues.
It’s crucial to choose the appropriate ITR form for precise tax filing and to steer clear of delays or penalties. Selecting the correct ITR form is essential as it facilitates accurate income reporting, enables you to claim eligible deductions and tax credits, and diminishes the chance of receiving a “defective return” notice from the Income Tax department due to incorrect form submission.
Several factors affect the choice of ITR form:
Here is a quick rundown of a few widely used ITR forms:
The tax regime that an Indian taxpayer chooses is crucial. From the fiscal year 2023–24 (Assessment Year 2024–25), the streamlined tax system—also referred to as the new tax regime—was replaced by the default tax regime under the Union Budget 2023. The current tax system allows taxpayers to continue filing their taxes. Through a choice on the ITR form, people can choose not to participate in the new system.
The Income Tax Department’s website provides tax calculators that let users determine their tax obligations under various regimes depending on their income and allowable deductions, which can aid in decision-making. This tool assists in determining which regime offers individual taxpayers the most benefits.
Before finishing your tax return, you must reconcile your income. That’s why this is important:
Here’s how to successfully balance your income step-by-step:
In India, Tax Collected at Source (TCS) is a crucial component of tax filing. It functions as a mechanism whereby a seller withholds from the buyer, during specific transactions, a predetermined percentage of tax. The vendor then gives the Income Tax Department this amount of tax. Applications for TCS include reservations for foreign travel, automatic purchases, and specific financial transactions.
Your Form 26AS (tax credit statement) and AIS, which are accessible on the Income Tax Department website, provide details about your TCS deductions. You can claim credit for this tax amount when filing your ITR form if you have received TCS deductions. Your total tax liability is decreased as a result of this activity.
It is critical to verify that all TCS deductions made during the year are correctly represented on your Form 26AS and AIS. In the event of any discrepancies, you can contact the seller that deducted the TCS to correct the records. By claiming credit for TCS deductions, you avoid double taxation on the same income, lowering your overall tax bill and potentially qualifying for a refund. The appropriate TCS rate varies according to the kind of transaction, and not all transactions require TCS deductions.
Tax credits comprise taxes (such as advance tax, self-assessment tax, TDS, and TCS) that are deducted or paid in advance during the year. You can be sure that you are only paying your net tax liability if you accurately report them in your ITR. A complete record of all tax deductions and payments made by you (advance tax, self-assessment tax) and on your behalf (TCS and TDS) can be found on Form 26AS (tax credit statement) and AIS, which are available online at the Income Tax Department.
It’s crucial to accurately provide all relevant information when inputting these tax credits into your ITR form, including:
Before filing your ITR, make sure there are no inconsistencies between the tax credit information provided in Forms 26AS and AIS and your personal records (such as TDS certificates, advance tax challans, and so forth).
Utilising eligible losses presents a valuable avenue for reducing your tax burden in India. Here’s a breakdown of the key considerations:
Various types of losses come with distinct carry-forward periods. For example, business losses typically have an eight-year carry-forward period, whereas capital losses are subject to specific regulations based on whether they are short-term or long-term. It’s important to maintain accurate records of your income and expenses to validate any claimed losses.
Disclosure of foreign assets and income is imperative for Indian taxpayers who are either residents or ordinarily residents (RORs). To confirm information about offshore investments, the Income Tax Department is increasing transparency and sending notices. Foreign assets owned by ROR taxpayers must be reported on their ITR.
A separate schedule (Schedule FA) for revealing details about foreign assets is included with the ITR form. This covers all bank savings accounts, investments, real estate, and other overseas holdings that are owned at any point during the fiscal year.
Non disclosure of foreign assets may lead to fines and possibly legal action. If information submitted to the Income Tax Department through international agreements differs from your ITR, there may be grounds for investigation and possible tax repercussions.
Also Read: ITR Filing 2024: How can you get relief under Section 89(1) for arrear money? A step-by-step guide
Make sure your bank account details are accurate and up to date when completing your ITR form in India to potentially receive a tax refund. You are entitled to a tax refund from the Income Tax Department if, after calculating your taxes and applying deductions and credits, you find that you overpaid. You must include your bank account information on your ITR form to receive your refund electronically. This comprises:
You must designate an active, verified bank account. Through a verification procedure, the Income Tax Department might pre-validate the details of your bank account. Additionally, confirm the accuracy and completeness of your bank account information thoroughly before filing your ITR. You can pre-validate your bank account via the Income Tax Department’s e-filing portal to save processing delays. Make sure that during the processing period, the bank account you designate for the refund is active and valid.
Filing your ITR form on time is critical to avoid different issues. Here’s a summary of the key points you should be aware of.
Prioritising the timely submission of your ITR is strongly suggested to avoid these negative consequences.
After filing your ITR, the final step is to verify its legitimacy. This verification must be done within 30 days of submitting, which is a significant change implemented in August 2022. It is critical to be updated about the amended deadline. You have a few convenient verification options:
Your ITR becomes null and void if you don’t authenticate it within 30 days. This could result in difficulties getting tax refunds, potential penalties, and delays in the procedural process. Prompt verification ensures that your ITR is processed effectively and without complications.
While many of you might already be familiar with the basic procedures for filing your ITR form, it’s crucial to keep all your income-related documents organised for quick access during the filing process. Make sure to thoroughly explore and claim all the tax deductions and exemptions you qualify for to reduce your tax liability. Additionally, settle any outstanding tax dues before submitting your return.
Finally, it’s recommended to refer to the Income Tax Department website or seek advice from a tax professional for comprehensive information and any specific requirements relevant to your individual circumstances.
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Published: 12 Jun 2024, 10:11 AM IST
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