Every Year, the individual and HUF taxpayers in India are required to file their Income Tax Return on or before due date i.e 31st July. However, owing to COVID-19, the Central Board of Direct Taxes (CBDT) has extended twice the due date of Tax Return Filing for AY 2021-22 to 31st December 2021 from 30th September 2021.
Quite contrary to popular belief amongst the individual taxpayers that Income Tax Return filing in India is very easy and can be done without the help of an expert, in reality, it is a very tedious exercise and requires expert guidance all the time and any mistake in ITR may lead to penalty and interest.
We are providing a brief checklist of things to be kept in mind while filing an Income Tax return.
1. All the Relevant documents and information shall be kept at one place
Before starting the process of ITR Filing, following information and documents shall be kept handy:
- Copy of Bank Statements of all banks for period 1stApril 2020 to 31st March 2021.
- Details of investment made in LIC, mutual fund, PPF, Child education Tution fees, Mediclaim.
- Details of income like Rent, shares sale, property sale, interest on FDR, salary etc.
- Details of saving interest on bank account.
- Latest mobile number, email id and residential address.
- In case of change in PAN or Aadhar, new copies of PAN and Aadhar.
- Details of any other income as may be required.
Further, while filing NRI tax return, following additional information may be required:
- Copy of Passport
- Number of days of stay in India in FY 2020-21 and last 4 years
- Details of all foreign bank a/c (Swift Code, Name of the Bank,IBAN, Country of Location)
- Tax Identification Number in Foreign Country.
- In case of remittance of money abroad, copy of form 15CA and 15CB for understanding nature of remittance.
2. Reporting of Interest income from savings account in bank and FDRs:
One common mistake committed by individual taxpayers in filing Income Tax Return is that they do not disclose interest on savings bank account while filing ITR. This may lead to penalty at the time of Income Tax assessment, if case comes under Faceless assessment.
3. Reporting of Exempt Income
Another mistake committed by taxpayers in Tax Return Filing is that they do not report exempt income. Non reporting of exempt income might attract income tax notice from tax department.
4. Reconciliation of income and TDS with form 26AS
The assessee shall reconcile all the taxes paid during a particular year like TDS, TCS, Advance Tax and Self-Assessment Tax with the amount shown in form 26AS. If excess taxes are shown in ITR form which is not matching with form 26AS, it will result in demand from tax department.
5. Clubbing of Income of minor child or spouse
This is an important aspect which is often ignored in Income tax return filing. In a situation, where the income of minor child or spouse needs to be clubbed in the Income of Taxpayers, assessee shall disclose such income in ITR otherwise, notice might be received from tax department.
6. Valid Bank Account Number shall be mentioned in Tax return
Nowadays, Income tax refunds are credited online directly into the bank account of taxpayers.
Therefore, it is important to mention correct and valid bank details in Income Tax Return form otherwise refund will not be credited.
7. Deduction u/s 80C, 80CCC, 80CCD and 80D
The assessee shall not forget to claim all the deductions in the tax return form which He is entitled for. Deduction u/s 80C, 80CCC and 80CCD can be claimed up to maximum Rs 1.5 lac. Similarly, additional deduction up to Rs 50,000 can be claimed as mediclaim u/s 80D
8. Selection of appropriate Tax Return form
It is very important to select correct ITR form while doing tax filing in India as selection of wrong form may lead to defective return and notice to rectify defects might be received by the assessee. For individual and HUF tax payers, following 4 forms are applicable:
ITR-1 – This form can be filed by an Individual with maximum salary income of Rs 50 lac, Income from other source, income from one house property, and agriculture income up to Rs 5000.
ITR-2 – This form can be filed by an Individual and HUF who does not have income from business or profession. Also, for filing NRI Tax return.
ITR-3 For assessee having income from business or profession, ITR-3 form can be used for ITR filing.
ITR-4 – For assessee having presumptive income u/s 44AD, 44ADA, 44AE and having total Salary income up to Rs 50 lakh, income from one house property, income from other sources, and agriculture income up to Rs 5000, can use this form for filing ITR.
9. Electronic verification of ITR
Once an Income Tax Return has been filed, it should be verified electronically within 120 days of such filing. Another option is to send the signed copy of ITR-V to CPC, Bangalore within 120 days of the filing of ITR for manual verification.
All the aforesaid points shall be kept in mind while doing tax filing in India for AY 2021-22