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What You Need To Know Before Filing Your Income tax Returns

Adhil Shetty

We are at the fag end of the income tax returns (ITRs) filing season. The last date for filing income tax returns is July 31. There is a possibility of the deadline getting extended, but it is advisable to be on time to avoid last-minute hassles and mistakes. Filing your returns before the deadline will give you enough time to collect all your documents and filing-related information, spot any errors, avoid last-minute panic and errors, and also save you from hefty penalties. With only a week left for the deadline, make sure to keep these crucial points in mind before you take up the filing process.

Organise Your Documents

Due to last-minute hurry, we may omit critical information from the ITR filing because the information and its pertaining documents may not be available to us. Collate all the required documents like PAN, Aadhaar, bank account statements, Form 16, interest certificates, rental income, rent receipts, capital gains or losses, and proof of income of other sources before you begin the returns filing process. Any errors or failing to disclose all your incomes may invite the scrutiny of the Income Tax Department. Form 16 is a crucial document required during income tax returns filing. This year there has been a change in its format, which has made it more detailed. Make sure to collect TDS certificates from all your deductors, including your employers and banks where you have opened an FD account.

Corroborate TDS With Form 26AS

Form 26AS is the annual tax statement that details the tax deducted from your income during a financial year. This form helps in ascertaining if the tax deducted from your income and the ones mentioned in the TDS certificates are the same. You can download Form 26As from the Income Tax Department website (TRACES). Discrepancies should be flagged with the deductor and rectified before the deadline. It is always wise to regularly review your Form 26AS.

Remember To Collect Capital Gains Statement

If you are a mutual fund investor, or have sold stocks, or any capital asset such as gold or property, you will be required to be taxes on your capital gains. For example, on your equity investments, you’ll need to be a 10% tax on Long Term Capital Gains exceeding Rs. 1 lakh, or 15% on Short Term Capital Gains. The taxation rules differ from one asset class to another. Therefore, ensure you know how much tax you need to pay on any gains you may have made.

Compute Your Taxable Income And Tax Liability

Your taxable income is income from all sources minus all the deductions you’re eligible for. Once you get the total income figure, calculate your tax liability by applying the tax rates in line with your tax slabs. You can use a tax calculator to compute your tax liability. If there is any tax due, make the payment. If you’ve paid excess taxes, get your refund.

Choose The Right ITR Form

The CBDT has notified changes in the ITR forms for the assessment year 2019-20. Before filing the form, do identify the relevant form. While ITR1 is for salaried and resident taxpayers, ITR2 is for those individuals who have earned an income or capital gain from house property. Business or profession taxpayers need to use the ITR3 form.

The author is CEO, Bankbazaar.com