Do’s and Don’ts of filing Income Tax Return
Do’s and Don’ts of Filing ITR: During each Financial Year, we are required to file our Income Tax Returns, also commonly known as ITR. Many of us think that filing of ITR is not necessary in our case as tax has been already deducted by the employer or our income is below the exemption limit and many more. Still it is advised to file ITR, even if the income is below the exemption limit, for various benefits attached with it.
Do’s and Don’ts of filing Income Tax Returns
Do’s for filing Income Tax Returns
Choose the Correct Form
There are 7 forms of Income Tax Returns. Each individual has to choose wisely the form in which they have to file their ITR. Out of these seven forms, ITR-1, 2, 3, 4 & 5 relates to individual’s total income, sources of income and other categories. Whereas, ITR-6 is for companies and ITR-7’s use is for filing of Income Tax Returns for Societies, Trusts, Political Parties, etc. If the individual files his ITR in incorrect form, then his return will be considered as invalid.
Also Read: 10 Ways To Save Your Taxes!
Choose the Correct Tax Regime
While filing the Income Tax Return, make sure that you choose the tax regime correctly. If you are an individual having income from salary, then you can switch between the old and new tax regime at the time of filing ITR. However, if you are an individual having income from business, then you can switch between the old and new tax regime only once. Further, selection of the correct tax regime can also help you in reducing your tax liability. So, choose wisely.
Select the correct Assessment Year
Assessment year is the year in which the income earned during the Financial Year is assessed as well as taxed. While both the Assessment Year and Financial Year starts on 1st April and ends on 31st March, Assessment Year is a year next to Financial Year. For the current filing period of financial year (2023-24), the assessment year for filing return is 2024-25. Entering the incorrect year in your ITR can lead to delay in getting your tax refund.
Check your Residential Status
The taxability on income of an individual depends upon his residential status. And, this residential status is different from the citizenship of the individual. Under the provisions of the Income Tax Act, 1961 tax is chargeable on the basis of the residency of the individual. Choosing wrong residential status can also lead to defective return.
Cross check your Form 26AS & AIS
While filing of ITR, mentioning amount of tax deducted from Form 16/Form 16A is not enough. The individual must cross check the amount of TDS from his Form 26AS as well as AIS. If the amounts in Form 16 and Form 26AS does not match, then the individual can get a notice from the Income Tax department.
Keep your investments proofs ready
During every financial year, the individuals make investment as a part of their future planning. Some of these investments are free from taxes subject to a certain threshold limit. Therefore, it is always advisable to keep record of all the investment proofs and show them in the form of amount while filing of ITR and claim tax refund, if applicable.
Also Read: Income Tax Slab Rates For Individuals Under The Old And New Tax Regime
Verify your Return
Filing of ITR does not fulfil your job. You need to verify it too. This is because the ITR is said to be have been duly filed when it has been verified by the individual. There are six ways of verifying the return – through Aadhaar OTP, net banking, bank account, demat account, bank ATM and e-verification procedure after filing ITR. If the return is not verified within 30 days of filing return, then it will be considered as invalid.
Don’ts of filing Income Tax Return
Miss the due date for filing ITR
The due date for filing the Income Tax Return for individuals is generally 31 July of the assessment year.
And, if you do not file your Income Tax Returns (ITR) by this due date, you have to incur penalties such as:
– A late filing fee of up to Rs. 5,000
– A penal interest rate of 1% per month will be charged on any unpaid taxes
– Delay in receiving a refund on any excess tax paid
To avoid these penalties and charges, you must be punctual and ensure that you do not miss the tax filing deadline.
File ITR when tax is payable
While filing of ITR, the individual must check that there are no tax liabilities on his part which are payable. In case, there is a tax liability, then there should be payment of the same before filing of ITR. This is so because filing of ITR with tax liability can lead to notice from Income Tax Department.
Make mistakes in personal information
The details of the individual – name, address, PAN, aadhaar number, date of birth and other relevant details should be exactly as per the details in his PAN/Aadhaar. Filing of incorrect information can result in delay of processing of ITR.
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