Points to Be Kept in Mind Before Filling Income Tax Returns

Points to Be Kept in Mind Before Filling Income Tax Returns

Introduction

We are well aware that the income tax filing season has started for the assessment year 2020-21. Thus, every taxpayer is looking forward to filing an income tax return on time. This article provides some important points which must be kept in mind before filing the income tax return. 

The Selection of Return Form 

The first step toward filing a return is the selection of the correct form. There is a total of 7 forms for filing income tax as prescribed by the tax authorities. The details whereof are annexed below;

  • Individuals and Hindu Undivided Family (HUFs): ITR 1 to 4
  • Partnership and Limited Liability Partnership (LLP):   ITR 5
  • Company: ITR 6
  • For claiming Exemption: ITR 7

Points to Remember Filing the Income Return Form

The following are some of the points to remember while filing the income tax form 

Disclosure of Interest from Bank Deposits and NSC Certificates

Although the deduction of income received as interest was withdrawn by the IT department a few years ago, still many people choose not to disclose the income earned from such bank deposits and NSC certificates. It does not matter how small the amount is, the interest has to be disclosed in the form.  Its interest income must not be skipped. In most cases, the employer may not consider the interest income while calculating the TDS of the employee. With regard to interest on Saving Bank Account, the assessee is obliged to claim a deduction under the provision of Section 80TTA, Income Tax Act 1961.

Deduction made for investment under 80C, 80CCC & 80 CCD is exempted upto Rs 1.50 lakh
Further, it should be kept in mind that the deduction made for investment under Section 80C, Contribution made towards pension fund under Section 80CCC, or Contribution by the employer to the pension scheme under Section 80CCD is exempted up to Rs 1.50 lakh.  The benefits that come under Section 80C include tuition fees paid by a parent for his children and repayment of the principal amount for the home loan taken.

The Clubbing of Income of spouse or minor child 

In some cases, the income of the minor child and spouse of the taxpayer can be clubbed with his income according to the provisions of the Income Tax Act, 1961. In such a case, it is essential that the correct form must be used for filing an income tax return.

To be Cautious while computing Cess and Surcharge

It can be considered a common mistake while computing the education cess and surcharge on the taxable payable amount.  It is to be noted that if the total income exceeds Rs. 100 lakh in a particular assessment year then a surcharge of 10% is not required to be added to the tax payable amount. However, the education cess of 4% must be added to the tax payable amount even if the total income exceeds 100 lakh in an assessment year.

The correct way to calculate the taxable amount is to first add a surcharge of 10% to the taxable amount if applicable and then add a cess of 4% on the taxable amount.

Safe filing of relevant documents for future requirements

 Although the need for attachment of various documents, certificates, etc, along with the return form had been dispensed the documents must not be trashed away as the aforesaid documents may be required in the future. It is never known that the tax authorities may need the documents to be submitted by the taxpayer in case of a proceeding of scrutiny which is generally initiated for verification of claims made in the return form.

Double checking of essential information such as bank account details, PAN No., Address for communication, etc.

In some cases, the taxpayer may commit a mistake while providing the correct PAN number. The 10-digit PAN should be mentioned correctly. Likewise, the communication address has to be mentioned with care as all the notices will be posted by the tax authorities on the provided address.

The bank account details also have to be filled in correctly in case of a refund proceeding. Care must be taken while providing the MICR code as the refund amount will be transferred through ECS.

 

 

BY: Admin Tax4wealth

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