Things to remember before filing your Income Tax

Key Things to Remember Before Filing Your Income Tax

1. Select the Correct ITR Form

Choosing the correct ITR form is crucial for accurate filing. The applicable form depends on your residential status and sources of income.

• ITR-1 (Sahaj): For resident individuals with income up to ₹50 lakh from salary, one house property, and other sources.

• ITR-2: For individuals/HUFs with capital gains or foreign income.

• ITR-3 & ITR-4: For business or professional income.

Using an incorrect form can lead to rejection or delays in processing your return.

2. Verify Pre-Filled ITR Information

The Income Tax Department now provides pre-filled ITR forms using data from Form 26AS, AIS, and TIS, which include:

• Salary income

• Interest and dividend income

• Capital gains

• Personal details

While this simplifies filing, taxpayers must verify all pre-filled data carefully. If you find any discrepancies, contact the respective bank, employer, or income payer to correct the details in their TDS filings.

3. Cross-Check Form 26AS

Form 26AS reflects all taxes paid on your behalf, including:

• TDS

• Advance tax

• Self-assessment tax

Ensure that the tax credit shown in Form 26AS matches your records. Any mismatch should be rectified before filing to ensure smooth processing and avoid notices.

4. Choose Between Old and New Tax Regime

Taxpayers can choose between:

• Old Tax Regime: Allows deductions and exemptions (80C, 80D, HRA, etc.)

• New Tax Regime: Lower tax rates but no major exemptions or deductions

Compare both regimes carefully and select the one that results in lower tax liability. Salaried individuals can change their choice while filing the ITR, even if a different option was chosen earlier with the employer.

5. Pay Any Remaining Tax Liability

After calculating total income and applicable tax:

• Adjust prepaid taxes (TDS, advance tax)

• Pay any remaining tax dues, including interest if applicable

If self-assessment tax exceeds ₹1 lakh, timely payment is essential to avoid additional interest and penalties.

6. Take Care If You Changed Jobs During the Year

If you changed jobs during the financial year:

• Ensure income from all employers is included

• Submit previous employer details to your current employer for a consolidated Form 16

Failure to do so may lead to incorrect TDS calculations and additional tax liability while filing your return.

7. Report Exempt Income

Even though some incomes are tax-exempt, they must still be disclosed under Schedule EI, such as:

• Agricultural income

• Minor child’s exempt income

• Income exempt under DTAA

8. Mandatory Disclosures in ITR

Certain disclosures are mandatory depending on income and residency status:

• All Indian bank accounts

• Unlisted equity shares

• Directorships in Indian or foreign companies

• Assets & Liabilities (mandatory if total income exceeds ₹50 lakh)

• Foreign assets and income (for resident individuals)

Incorrect or non-disclosure may lead to penalties.

9. ITR Filing Mandatory in Certain Cases (Even Without Taxable Income)

As per tax laws, ITR filing is compulsory if you have:

• Electricity bills exceeding ₹1 lakh

• Deposited over ₹1 crore in current accounts

• Spent more than ₹2 lakh on foreign travel

10. Consequences of Missing the ITR Filing Deadline

Failure to file ITR on time can result in:

• Late filing fees under Section 234F

• Interest on unpaid tax

• Loss of carry-forward of losses

• Possible scrutiny or notices from the tax department