Know the ITR deadline: As the last date to file the income tax return (ITR) looms closer and you have not yet filed the return, it is imperative to first decide the tax regime you plan to opt for. One should file their ITR by July 31 of a financial year to avoid penalties (non audit).
Understand your tax regime: The new tax regime is the default regime; so one will have to deliberately opt for the old tax regime if you want to avail any of the tax deductions and exemptions.
The old tax regime that existed before the introduction of the new tax regime allows people to claim more than 70 tax deductions and exemptions to reduce their taxable income.
Deductions allowed under the new tax regime include a standard deduction from salary of ₹50,000 and deduction under section 80CCD(2) for employer's contribution to employee NPS accounts. Other deductions which are not allowed include leave travel allowance, HRA, medical insurance premium and interest on home loan for self-occupied houses.
Informing the employer: The employee is supposed to inform the employer with regard to his intended tax regime during the year. If the employee does not intimate the employer, the employee will continue to be in the default tax regime, and it will be presumed that he has not exercised the option to opt out of the new tax regime.
Check required documents: After knowing which tax bracket one falls into, the next important step is to collect all the relevant documents. The Income Tax Department requires taxpayers to submit various documents to substantiate their income, deductions, and tax payments. So, as the ITR filing process has become more streamlined and digitised, organising and saving the required documents on one’s digital device makes the filing process faster and more accurate.
Select correct ITR form: The next step is to identify and choose the applicable ITR form based on one’s income sources and total income. In the first week of April this year, the Central Board of Direct Taxes (CBDT) made the ITR forms and Excel utilities available on the e-filing portal to encourage early return filing by taxpayers. Enlisted below are the kinds of forms and the requirements.
● ITR-1: For resident individuals, having the source of income from salary, one house property, and other sources (such as interest and dividends), with a total income of up to Rs 50 lakh.
● ITR-2: For individuals and Hindu Undivided Families (HUFs) with income sources from capital gains or foreign assets
● ITR-3: For individuals and HUFs with income sources from a proprietary business or profession.
● ITR-4: For individuals and HUFs with presumptive income from business or profession.
Verify details: Before filing an ITR, taxpayers must verify their personal and bank account details to avoid delays in the tax refund process. Ensuring details, such as name, address, email, and PAN (Permanent Account Number), are linked and are accurately mentioned in your tax return.
Choose correct assessment year: Ensure to mention the correct assessment year (AY) on the tax return, as providing the wrong AY can result in double taxation and unnecessary penalties. It’s important to note that this year, one will be filing taxes for the financial year 2023–24, meaning that the corresponding AY is 2024–25.
Verify details in Form 16: Ensure in advance that the details in one’s Form 16, such as salary components, TDS deducted, and tax-saving investments, are correct. Cross-check the information with the pay slips and investment statements. Any discrepancies should be reported to your employer for correction.
Aggregate Income from Multiple Form 16s: If one has multiple employers during the financial year, make sure to aggregate the income from all your Form 16s before filing the return. This will help you claim the correct deductions and ensure that your total income is accurately reported.
Reconcile income with Form 26AS and AIS/TIS: Thoroughly reconcile the total income with the information available in Form 26AS (Tax Credit Statement) and AIS/TIS (Annual Information Statement/Tax Information Statement), as it will help one identify any discrepancies and ensure that all the income sources are accurately reported.
App to your rescue: AIS App is a free mobile application, provided by the Income Tax Department, Government of India. The app is meant to provide a comprehensive view of the Annual Information Statement (AIS), which is a collection of various information pertaining to a taxpayer. Taxpayer can provide feedback on information displayed in AIS. The AIS information is also accessible through the AIS web portal
