A salaried individual earning more than a certain amount is required to pay an income tax. The source of the income may be varied. Be it interest earned from savings, sale of any property, income from investments like mutual funds or professional income, and salaries. Income Tax return filing is essential and can be quite a drab process for most of us. The process involves the collation of multiple but indispensable documents from employers, banks and multiple other sources that need to be compiled and filed. People with multiple investments usually end up failing to mention certain key aspects, as almost always, the returns are filed hastily. To prevent this from happening, an individual must be mindful of certain key factors.
Picking the right forms
As simple as it may sound, individuals must pick the right form to file their income tax returns. For individuals who receive an income from a salary/pension, a single house property and other sources of income, ITR-1 is the form they need to submit. Form ITR – 2 is for individuals that receive incomes from multiple properties and earn salaries of over 50 lakhs, who are directors of companies, hold investments in unlisted shares or have foreign income/assets. Individuals who receive incomes from a business, profession or by being a partner in a firm need to pick up form ITR – 3. And finally, partnership firms and Indian residents who earn an income of up to 50 lakh from a business or profession that includes presumptive income need to file their returns using ITR – 4.
Income Tax return filing can be done in two ways. One method is to download the ITR forms from the e-filing website in the form of an Excel utility, fill in the necessary information, generate an XML file and then upload the returns on the e-filing website of the Income Tax Department. The other method is to directly enter all the information on the online form of the e-filing website and submit it. As a prerequisite, you must be registered with the e-filing department of the income tax department. What makes life a tad bit easier is that the tax return forms now contain pre-filled information. While this enables ease of filing, the individual must be wary of the pre-filled details and ensure that they match the information provided by the various supporting documents to avoid instances of misreporting information.
It is essential that the individual has all the documents required to file their income tax return. Cross checking the information while uploading your returns is absolutely vital. Here are the documents required to make the process easier.
- Form 16 – As a salaried person, this document is extremely important as it provides details of your salary and the TDS deducted on it.
- Interest Certificates – These certificates are necessary to verify the source of income from fixed deposits, savings accounts, etc. They can be sourced from banks or post offices.
- Form 16A – This is required when the TDS is deducted from payments other than the salary. It includes income received from recurring deposits, fixed deposits, etc.
- Form 26AS – Essentially a tax passbook, this form is a consolidated annual tax statement.
- Claiming deductions – Under section 80D to 80U, there are certain expenses like, health insurance premiums, interest on education loans, etc.where deductions can be claimed.
- Bank Details – All banks accounts under your name have to be reported and pre validated.They must also be linked to your PAN card.
- Aadhar Card – It is now mandatory to provide your Aadhar details to successfully file ITR.
There are instances where individuals end up making mistakes while filing their returns or deliberately entering wrong information to claim increased refunds. This results in instances of non-reporting and misreporting which further complicates the process. Negligence while filing Income tax returns could lead to fines or tax notices from the income tax department. Here are a few things to keep in mind while filing your taxes.
Accurate Personal Details:
Every single bit of communication happens either through the post, emails or via the phone. It is imperative to provide the right details to ensure that important information communicated isn’t missed.
Correct Income sources:
An individual must never report falsified income sources to earn more tax benefits. This is a criminal offence and will quite certainly result in jail time.
If an individual owns more than one house, it must be declared. It doesn’t matter if the house is occupied by tenants, extended relatives, etc. If you own the house you are liable to pay tax on it and must declare it.
Report all Income:
Whether it’s the salary or income from interest earned from various sources, it must be declared. Even if the income is tax free. If an individual has recently changed jobs, income earned through both employers must be reported.
To ensure that your taxes are filed without any frills or penalties, these are some of the things that a taxpayer needs to be aware of, while filing their Income Tax returns.