Filing income tax return? Key points to know before submitting ITRs
For financial year 2022-23 and assessment year 2021-22, the deadline to submit tax returns is July 31.
The deadline to submit income tax returns (ITR) for financial year 2021-22 and assessment year 2022-23 is July 31. Most taxpayers, therefore, are in the process of filing their ITRs. Tax returns should be filed as early as possible also to avoid any potential last-minute hassles.
While the Income Tax Department provides pre-filled forms to help salaried individuals file their returns without any hassle, taxpayers, too, should keep all the required documents handy, and cross-check each field in the pre-filled forms.
Meanwhile, individuals filing ITRs for the first time should keep the following key points in mind:
(1.) Choose correct ITR form: For accurate filing, select the applicable form depending upon your residential status and income earned from various sources. The return will not be processed if filed through a wrong form, and the tax department may send you a ‘defective return notice’.
(2.) New tax regime vs old tax regime: For business owners, the tax regime, once selected, cannot be changed. However, individuals with income from salary, house and property can change their tax regime every year.
The new optional tax regime, with modified tax slabs and rates, was introduced by the Income Tax Department, through Finance Act 2020. However, those opting for the new regime will have to forgo exemptions and deductions.
(3.) Pre-filled ITR forms: The pre-filled information includes personal details, salary, dividend income, interest income, capital gains etc. However, if the information is incorrect, it is advisable to reach out to bank/payor of income so that accurate details are reflected.
(4.) Verifying prepaid taxes: It is crucial to verify prepaid taxes, including tax deducted at source (TDS), advance tax and self-assessment tax. Any discrepancy should be notified to the employer (for salary income), other payors (for other incomes) and banks (for advance tax/self-assessment tax payments).
(5.) Payment of balance taxes: After determining the total taxable income, applicable rates should be applied to calculate the total tax liability. Any taxes due on the tax return after claiming credit of prepaid taxes should be paid, including applicable interest, if any, before filing the tax return.
(6.) Disclosure requirements: The assets and financial investments that should be disclosed are – specified details of all Indian bank accounts, specified details of unlisted equity shares, and details of directorship held in Indian or foriegn firms.
(7.) Balance taxes payment: Evaluate tax liability in advance, and make the necessary tax payments within the due dates. This will help you avoid levy interest applicable on delayed tax payments.
(8.) Reporting exempt income: Agriculture income, exempt income of a minor, income not chargeable to tax as per Double Taxation Avoidance Agreement, etc., should be reported.
(9.) Change in employment: If a taxpayer furnishes requisite income and salary details from his previous employer, to his current company, the latter can issue a consolidated Form 16 and 12BA, on the basis of which ITR can be submitted.
(10.) On missing ITR filing deadline: In such a scenario, the taxpayer may face action under the Income Tax Act. This includes one of, or a combination of levy of late filing fee, payment of interest on balance tax liability, ineligibility to carry forward certain losses etc.