Filing income tax returns can be a chaotic experience and it’s possible for certain important “ must do’s” to slip out of our mind. The repercussions of such negligence, however, could be huge and may land you in a soup later. To help you file error free returns, we have compiled a list of things to keep in mind while filing your ITR for FY 2018-19
Check your ITR Form Eligibility
The income tax department releases updated ITR forms each year and mentions the eligibilty criteria for the same as well. It is important to know which ITR form is applicable to you based on the eligibility criteria disclosed. Apart from this, you may have to disclose additional information as new fields may be added to the forms.
It is possible that you might have been filing a particular ITR every year but according to new changes in the form, you may have to file another one. It is hence, important that you go through and understand these changes well in advance to act accordingly.
P.S. If you want to know which ITR is applicable to you and the new changes implemented in each ITR form, read this article.
Keep necessary documents ready
It is important to collect and safely keep all the necessary documents you may require while filing your returns. Some of these documents include; bank statements, Form 26AS, Form 16, rental agreement, sale, and purchase deed if you have sold house property, interest certificates, capital gains statements from the sale of mutual funds/shares, etc.
It is advisable to retain these supporting documents for a few years so that the same can be presented to the assessment officer in case any discrepancies are found in the returns for the financial year.
Report all income including Foreign Income
It is important to disclose all sources of income for FY 2018-19, apart from salary while filing your returns. This includes interest income from the bank savings account, rental income, capital gains.
Also if you have income from foreign assets like through bank account, shareholding or any other asset, such income needs to be reported as well.
Please do not hide any income source as even a small mismatch in detail can get you under scrutiny from the Income Tax department, as tax records are integrated online.
Check your residential status
The income tax liability of an individual is dependent upon the residential status of the Individual and the individual is required to disclose the residential status while filing the income tax returns. As per the Income tax guidelines, the residential status of an individual can be classified based on the number of days a person stays in India as:-
- Resident but not ordinarily resident
- Resident and ordinarily resident
It is very important to state the correct computation of stay while filing ITR. You can check the same by using the residential status calculator on the Income Tax website.
Reconciliation of information in TDS certificates
You must always keep all TDS certificates like Form 16, Interest certificate from banks ( Form 16 A), Form 16 A and Form 16 B ( rental income TDS certificates) and check whether the TDS deducted against your PAN matches with entries in your consolidated tax statement i.e Form 26 AS.
This reconciliation is important to avoid non-reporting or additional reporting of income or deductions. Any mismatch in the information stated during the tax return, Form 16 and Form 26AS can lead to an inquiry by the tax department so if you see there is a discrepancy you should immediately notify the deductor to make corrections, else you won’t be able to claim a tax credit against TDS.
Claim All Deductions correctly
In case you have not been able to submit deductions and investment proofs to your employer like 80C investment proof details, insurance payment, medical insurance receipts, tuition fees details etc, you can still claim the same while filing tax returns so be mindful of keeping these documents with you and it is advisable to retain them for some time in case the tax authorities ask you to furnish them
Forms to be filed before filing ITR
If applicable, a taxpayer may need to file certain forms before filing ITR, and this is a very important point that is often overlooked and attracts scrutiny from the Income Tax department. Let’s discuss two of these instances.
Consider this, your tax liability is calculated based on the total income you earn from various sources in a year. Now if you have received a certain portion of your salary in arrears ( unpaid income/past dues from previous years paid in the current year) or a portion of the income in advance, it would increase your tax liability for the year. The tax rates applicable then may also have increased and you would have to pay higher tax. The Income Tax Act, however, has a provision of relief in such a case. Under section 89 ( 1) you can claim relief for the same
In case you have received from previous years during FY 2018-19, your computed tax liability may increase due to this extra amount now added to your income and you may have to pay extra tax. However, you can claim relief in such a case and prevent paying extra taxes. For this, you would have to file Form 10E to get relief under section 89 (1).
This is a mandatory form to be filed by anyone claiming tax relief under section 89 (1)and is available on the tax department’s e-filing portal. You do not have to attach this form while filing tax returns just make sure you file it before filing ITR. Taxpayers who claim relief under section 89 (1) without filing Form 10E will receive a notice from the Income Tax Department regarding the same.
Similarly, another important form to be careful about is Form 67. A taxpayer is required to mandatorily file form 67 is he is claiming foreign tax relief. Now as per the tax laws in India, if a resident of India has paid taxes outside India, he can claim a credit of foreign taxes paid against his tax payable in India. [ Section 90, Double Taxation Avoidance Agreement]. This form is available on the tax department's e-filing portal and must be filed before filing ITR to claim the relief.
Linking of PAN with Bank Account
It is important to link your PAN with the bank account so that if there is any tax refund, it can be credited in the account. This is in effect from March 1, 2019. You are also required to pre-validate the bank account on the Income Tax e-filing website. You can find the pre-validation option under the profile settings tab after you have logged into the tax portal.
Double Check Personal Details
Please make sure you have filled all the personal details like name,aadhaar number (or enrollment number), phone number, birth details, email ID ( personal email ID only ) and address details correctly.
In case you are claiming a refund, make sure the bank details furnished are correct. Make sure you also report all bank account details held by you except the inactive accounts.
Once you have filed your returns, make sure you verify your tax returns with Aadhaar or net banking option within 120 days of submitting the return. Please note if the tax return is not e-verified within 120 days, the tax return will not be considered valid.
Please remember to exercise caution while filing your income tax returns online, especially if you are filing the returns yourself. Make sure you file your returns well in advance to avoid last minute hassle. Reach out to qualified tax consultant in case you find yourself in difficulty but do not file wrong returns.
Disclaimer:The information related to tax filing presented in this blog post is general in nature. Please consult your tax advisor or CA for accurate tax filing advice related to your particular situation.