E-filing of Income Tax Return 2019-20: It's that time of the year again when taxpayers are stuck with the tedious job of filing their income tax returns. While the process may be wearisome but it is equally important. It is essential to file an income tax return to prove that an individual has a source of income which, in the long run, helps them take a loan or apply for a VISA.
However, experts suggest one should file one's income tax returns carefully to avoid any mistake. Even a single mistake can make a taxpayer's tax filing invalid by the Income Tax Department. Also, if you are new to filing tax returns, take the help of experts and advisors before filing.
Find out the key points to keep in mind to avoid making any mistake while filing an income tax return.
1. Selection of correct return form - While filing IT return, the first and foremost thing is to select the correct IT Form.
The selection of the form should be on the basis of the status of the taxpayer, such as either individual, Hindu Undivided Family (HUF), partnership firm, the source of income and if any asset is situated outside India. The ITR forms depend on the individual's situation. For instance, ITR 1 to ITR 4 are applicable for individuals and HUFs, while ITR 5 is for LLP and partnership firms, and ITR 6 is for companies.
2. Personal information - It is utmost important to give all your basic information correctly. Basic information like name, date of birth, PAN details, address, bank account details, is needed while filing a tax return. The details you enter while filing the tax return should match the details with the PAN database maintained by the income tax department, as a single mistake can make your tax return invalid.
3. Assets and liabilities - Disclose the cost of movable assets such as vehicles, jewelry, bullion, cash in hand, along with immovable assets such as land and building, in case the income of the assessee exceeds Rs 50 lakh. Also, if you invest in equity shares or mutual funds, you need to report your gains or losses. Short-term gains are allowed to be carried forward and set off in future years and, therefore, one must report these in one's tax return.
4. Credit of TDS - While calculating the overall tax liability, credit of Tax Deducted at Source (TDS) on the income earned during the year should be taken into account. The assessee needs to verify tax credits available in Form 26AS and on the NSDL website. Mismatches of this information are the cause of incorrect tax computation. Non-credits should be taken up with the TDS deductions or with the bank as soon as they are noticed.
5. Foreign assets and income - Experts suggest if an individual holds either a bank account, or retirement accounts outside India, or any other assets for instance shares of a company listed outside India, it is mandatory for the taxpayer to report all his/her foreign holdings while filing the tax return, irrespective of whether they have taxable income or not. The foreign source income needs to be converted into Indian currency at the exchange rate mentioned in the tax rules.
6. Report interest income from all sources - While filing the tax return, income from savings account interest, fixed deposits, and recurring deposits should be mentioned, as all of these are taxable.