Income Tax Return Filing – 6 points to remember

If you are planning to file income tax return, then do remember the points given below before income tax return filing.

Why Income Tax Return Filing Is Important ?

This is the rainy season in India and you must be enjoying the monsoon showers from heavens, but this is also the season of income tax return filing. You may think that should you file returns at all? No doubt, there are many people who think just because their income is not taxable they don’t need to bother about income tax return filing. But remember that even if you owe zero tax or have paid all your taxes or your company has cut the required TDS i.e. Tax Deducted at Source, you still have to file your income tax returns.


Income Tax return Filing

Filing Income Tax Return Is Mandatory

It is mandatory for you to file income tax returns if your gross taxable income is above the basic exemption limit. This limit is Rs 2.5 lakh for regular taxpayers, Rs 3 lakh for senior citizens (above 60) and Rs 5 lakh for very senior citizens (above 80). Apart from the legal point of view, income tax return filing is of great help, when you apply for a loan from any bank or financial institutions or you apply for a visa to work overseas. Besides, it is always advisable to keep your financial and tax records in order from the viewpoint of financial planning.

Avoid Mistakes Before Income Tax Return Filing

Normally 31st July is the last date of income tax return filing for normal taxpayers (whose accounts need not be audited) and in some case, the income tax department may decide to extend this date. So better to file your income tax return as soon as possible, but it is a common tendency among taxpayers to wait till last to do it as income tax return filing may seem a cumbersome exercise. But if you take into consideration 6 simple facts, the process of income tax return filing will be easier for you. These are the errors and mistakes which normally taxpayers do inadvertently but it may cost them dear. And these errors and mistakes can be avoided quite easily.

1) Income Tax Return Filing Mistakes While Giving Personal Information In Return Form:-

It is important to submit your personal information correctly in income tax return forms as the income tax department relies on these information only to approach you in case of any communication. So while filling these information to assigned boxes, be extra careful to write your PAN, Aadhaar Number, the amount of tax deposited and the details of your bank account. If you do any sort of mistake in giving these details, it is quite possible that your tax liability would change. It may also happen that your refund will not reach you on time and even you can get a notice from income tax department for explanations. And, your whole hard work in income tax return filing will prove worthless. So it is advisable to first fill the information with care and re-check all those before pressing the submit button.


2) Not choosing Right Income Tax Return Form:-

The forms for income tax return filing change almost every year. There may be minor changes in the return forms so it is better to understand which form will be suitable for you. This year you may not need the same return form which you filled in last year as possibly your financial situation changed this time around. I am giving you a brief idea about which forms to use this year.

There are 7 Income Tax Return Forms which you can use. Earlier there were 9 forms but this year government has reduced its number to 7.

Type of Return Forms for Income Tax Return Filing

ITR 1:This income tax return form is most used. It is also called Sahaj and is for people with,
* Income from salary/ pension (upto Rs. 50 lakh)
* Income from one house property.
* Income from other sources (bank interest, exempt income from capital gains, etc).

ITR 2:This is for people who have:
* Income from salary/pension
* Income from house property (more than one house property)
* Income from capital gains/loss on sale of investments/property (both short term and long term)
* Agricultural income more than Rs 5,000
* Income from other sources (lottery, legal gambling)
* Income of a person as a partner in a firm (there’s a change this year – instead of ITR 3, you now have to fill ITR 2)
* Foreign assets

ITR 3:– This is for people who

* Are an individual or HUF with income from proprietary business or profession

* Have income from house property
* Have income from salary, pension and other sources

ITR 4:– This return form is for people who have presumptive income from business and profession. This form is also called Sugam. Please note that earlier ITR 4(S) was Sugam but now ITR 4 has replaced ITR 4(S).

ITR 5:– This income tax return form is for persons other than individuals, HUF, company and those filing ITR 7.

ITR 6:– This form is for companies.

ITR 7:– This form is for persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)

Remember that if you are not choosing right return form for income tax return filing, your IT return may be rejected and you will be required to start afresh the whole process.

3) Not Consulting Form 26AS Before Income Tax Return Filing:-

Before filing income tax return, it is advisable to download Form 26AS from the income tax department website. This form has details of all the TDS deducted on your income. This income you may have earned through salary, interest from bank deposits or consultancy fees. You should check TDS details from Form 26AS and also match the net amount paid to you from your bank statement. For salaried taxpayers, this form is very useful as they can complete income tax return filing with its help even if they don’t have the form 16. If they have their salary slips, details of their CTC (cost to company) and bank statements apart from form 26AS, they can file their returns.

4) Failing to claim deductions:-

Claiming deductions reduce your tax liability substantially. So if by any chance, the form 16 received from your company doesn’t mention it, you can still claim those deduction in your income tax return forms. These deductions are claimed under section 80C, 80CCD, 80CCD(1B), 80D, 80(E), 80(G) and 80(U). Just remember one thing that you should have required documents to prove your claim.

5) Forgetting to disclose foreign assets/income or exempt income

If you have a foreign bank account, foreign income or foreign investment, you need to give its details in the ITR form. All details related with these items have to be put in. Any goof-up here might bring you under the taxman’s lenses. Similarly, if you have got amount from PPF account, dividend from equity, long term capital gains or agricultural income, you must disclose these. These income are exempt i.e. you need not pay taxes on these, but even then it is mandatory to report this to income tax department. Failing this you may get a notice from IT department.

One more thing, the interest received from bank FD is not exempt and you need to show this as your income from other sources and pay tax as per your slab. But the interest received on savings account from a bank, cooperative society or from post office is tax free up to the limit of Rs. 10,000 per year under section 80 TTA. If you do not disclose this in your ITR while income tax return filing, you may have to pay interest and penal liability in case the aggregate amount exceeds Rs. 10,000. However in case the interest amount in respect of saving bank account does not exceed Rs. 10,000 you are still liable for penalty for failure to disclose the income.

6) Non-verification of Income Tax Returns After Income Tax Return Filing

After income tax return filing, you need to sign it digitally. But if you don’t have digital signature, you are required to verify the acknowledgment of your income tax return i.e. form ITR-V. Either you need to sign on the copy of ITR-V and send it to CPC, Bengaluru or you can e-verify your return. For this you can take the help of your Aadhaar, online banking or demat account. This verification has to be done within 120 days of filing income tax return. Please note that without verification, your income tax returns are not processed and it is assumed that you have not filed your return.

You may argue that even after last date, income tax returns can be filed. Yeah, you are right and its true that the process of income tax return filing is open even after due date, but there is a price which you may have to pay for late filing. If you don’t file return till last date-

  • You might miss on your refund or get it late
  • Interest on refund may be denied to you.
  • You will not be able to revise your return, if required.
  • You lose the benefit of carry forward of losses.
  • Your case can be picked up for scrutiny.
  • You may have to pay penal interest on the outstanding tax at the rate of 1% per month under section 234A.

I don’ think that any one of us would like to land ourselves in such trouble. So, I will advise that complete the process of income tax return filing as soon as possible. And, if you keep the above mentioned points in mind, the income tax return filing process will be a smooth one for you.

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