The
return filing season is on and for salaried employees the last date for filing
the IT return is 31st July, 2016 (for returns pertaining to FY
2015-16). Timely filing of return is a good practice and has many advantages
too. However, apart from timely filing it is very important to file correct and
accurate information. In this article we shall discuss few important points to
be kept in mind before filing the return of income.
Selecting the correct return form
6
different forms are notified by Government for an individual tax payer viz. ITR
1, ITR 2, ITR 2A, ITR 3, ITR 4 and ITR 4S. A taxpayer not having income from
business/profession has to select only from 3 forms viz. ITR 1, ITR 2 and ITR
2A. Thus a salaried person not having business/profession income has to choose
amongst ITR 1, ITR 2 and ITR 2A depending upon his/her income.
Providing correct and complete personal and other details
Apart
from providing correct personal details it is very important to provide
complete information which will cover items like email id, telephone/mobile
number, aadhar number, passport number (not required if filing ITR 1) and
details of all bank accounts (saving/current).
Providing correct income details
Details
of all the incomes earned during the year should be declared. It should be
ensured that incomes like interest on investments, interest on saving account,
taxable gain on sale of shares/mutual funds, etc. are declared in the return.
The common mistake observed is omission to declare interest on saving bank
account, FDs, NSC, etc. If you have earned interest on saving bank account/post
office saving account then don’t forget to declare the same in your return and
on the same hand make sure that you claim deduction upto Rs. 10,000 under
section 80TTA (first you have to declare entire saving interest as income and
then claim deduction under section 80TTA of upto Rs. 10,000).
Declaring exempt income
It’s
true that exempt income is tax free, but it does not implies that exempt income
is not to be declared in the return of income. Non-taxable incomes like exempted
allowances, dividends, gain on sale of listed share after holding for more than
1 year, etc. should also be declared in return of income. Return forms have a
separate section for declaring the exempt income. It should be confirmed that
non-taxable incomes are reported in the section of exempt income and are not
added with taxable income.
Declaring clubbed income
At
times income of spouse/minor child is clubbed along with the income of taxpayer,
in such a case it should be ensured that the income so clubbed is included along
with the income of the taxpayer and declared in the return. In case of taxpayers
filing the return in forms other than ITR 1, the clubbed income is also to be
declared separately in the details of “income of specified person”. For
taxpayer filing the return in ITR 1, it is sufficient if they just add the
respective income along with their income (as there is no separate section for clubbed
income).
E.g.
Mr. Raja has made a fixed deposit in the name of his minor daughter and
interest for the year on this fixed deposit amounted to Rs. 84,000. In this
case, considering Mr. Raja’s income more than his spouse’s income, the interest
of Rs. 84,000 on FD in the name of minor daughter will be taxed in the hands of
Mr. Raja and will be added along with his income. Exemption under section
10(32) is available upto Rs. 1,500 per minor and hence in this case net income
of Rs. 82,500 will be clubbed (Rs. 1,500 will be reported in the section of
exempt income). Rs. 82,500 will be taxed under the head income from other
sources. If he is filing return in ITR 1 then he will add interest of Rs. 82,500
along with his income under the head other sources. If he is filing return in
forms other than ITR 1 then he has to add interest of Rs. 82,500 along with his
income and also needs to declare minor’s income so clubbed in the section of
“Income of specified person” (referred as Schedule SPI in return form). In both
the case he has to declare Rs. 1,500 under the details of exempt income.
Claiming all the deductions
A
taxpayer is entitled for certain deductions from his income as specified under
section 80C to 80U (few major items are payment of life insurance premium,
investment in PF/PPF, NSC, repayment of home loan principal component,
investment in tax saving pension plan, investment in NPS, payment of medical
insurance, payment of interest on
educational loan, specified donations, etc.). While filing the return of income,
it should be ensured that all the deductions which are legally available to
taxpayer are claimed in the return of income.
Confirming the tax credit with form 26AS
This
is a very important step which should never be skipped before filing the return
of income. Form 26AS reflects the tax credit in the account of taxpayer as per
the database of Income-tax Department. This will reflect credit of taxes paid
by the taxpayer in the form of TDS, TCS, advance tax and self-assessment tax. Form
26AS can be downloaded from the taxpayer’s e-filing account at www.incometaxindiaefiling.gov.in
If
there is any mismatch between the tax credit reflected in form 26AS and tax
credit as per the taxpayer’s actual data, then appropriate action should be
taken to match the same. It is advised to file the return only after matching
the tax credit as per form 26AS with the actual tax credit for which taxpayer
is entitled.
Paying any due before filing the return
It
should be confirmed that tax/interest payable (if any) as per the return of
income should be paid before filing the return of income and the details of
such payment should be mentioned in the return of income.
Bank account for refund
If
refund is due on returned income, then ensure that you select the correct bank
account in which you desire to get the refund. The refund of excess tax paid by
you will be credited to the bank account opted by you for credit of refund,
hence, select only that account in which you desire to get the refund credited.
Declaring details of assets and liabilities
If
the taxable income exceeds Rs. 50,00,000 then the details of assets and
liabilities are also to be provided in the return under the section referred as
“Schedule AL”. The value to be reflected will be the cost and the items are
immovable property i.e. land/building, movable property being cash on hand,
jewellery, bullion, etc. and vehicles, yachts, boats and aircraft. Apart from
value of above assets, any liability attached to these assets is also to be
declared.
Details of foreign income
If
you have earned income from outside India then ensure that the same is declared
in your return of income being filed in India in the section referred as
schedule FSI and if any tax relief is available for foreign income then provide
the details of such relief in the section referred as schedule TR
Details of foreign assets
If
you hold foreign asset then make sure that you provide the details of these
assets in the section referred as schedule FA.
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