The deadline for filing income tax returns (ITRs) for fiscal year 2021-22 and tax year 2022-23 is July 31. Most taxpayers are therefore in the process of filing their ITRs. Tax returns should also be filed as soon as possible to avoid any potential last-minute hassles.
Read also : How to file a tax return | Step by step guide, necessary documents
While the Income Tax Department provides pre-filled forms to help employees file their returns hassle-free, taxpayers should also keep all required documents handy and check every field in the pre-filled forms.
In the meantime, people filing ITRs for the first time should keep the following key points in mind:
(1.) Choose the right ITR form: For accurate filing, select the applicable form based on your residency status and income from various sources. The return will not be processed if it is filed on the wrong form, and the tax department may send you a “defective return notice”.
Read also: Filing of the tax return | Latest date, details on new forms and full checklist
(2.) New tax regime vs old tax regime: For entrepreneurs, the tax regime, once selected, cannot be changed. However, individuals with income from wages, real estate and real estate can change their tax regime each year.
The new optional tax regime, with modified brackets and tax rates, has been introduced by the General Directorate of Income Tax, through the Finance Law 2020. However, those who opt for the new plan will have to waive exemptions and deductions.
(3.) Pre-filled ITR forms: Pre-filled information includes personal details, salary, dividend income, interest income, capital gains, etc. However, if the information is incorrect, it is advisable to contact the bank/income payer so that the correct details are reflected.
(4.) Verification of prepaid taxes: It is crucial to check for prepaid taxes, including withholding tax (TDS), withholding tax and self-assessment tax. Any discrepancies must be notified to the employer (for salary income), other payers (for other income) and banks (for withholding tax/self-assessment payments).
(5.) Payment of taxes on the balance: After determining the total taxable income, the applicable rates should be applied to calculate the total tax payable. All taxes owing on the tax return after claiming the prepaid tax credit must be paid, including applicable interest, if any, before filing the tax return.
(6.) Disclosure Requirements: Assets and financial investments that must be disclosed are – specified details of all Indian bank accounts, specified details of unlisted shares and details of directorships held in Indian or foreign companies.
(7.) Payment of taxes on the balance: Assess tax debt in advance and make the necessary tax payments on time. This will help you avoid charging applicable interest on late tax payments.
(8.) Declaration of exempt income: Agricultural income, exempt income of a minor, non-taxable income according to the agreement on the prevention of double taxation, etc., must be declared.
(9.) Change of employment: If a taxpayer provides the required details of his former employer’s income and wages to his current company, the latter may issue a Consolidated Form 16 and 12BA, on the basis of which the ITR can be submitted.
Read also : For taxpayers with two Form 16s, steps to file their ITRs
(10.) In the event of non-compliance with the ITR filing deadline: In such a scenario, the taxpayer may face action under the Income Tax Act. This includes one or a combination of levying late filing fees, paying interest on the balance of tax payable, ineligibility to carry forward certain losses, etc.