Most people dread the tax season. Paying tax is seen as a burden and the whole process of filing returns is associated with boredom and complexity. Some taxpayers make mistakes too. For example, while filing taxes, some do not consider their entire income or others fail to consider all the taxation rules. Some try to evade taxes. Filing incorrect returns deliberately or unintentionally can land you in hot soup. It is important to file the correct income tax returns and to pay tax applicable before the due date .
Here are some golden rules to remember for filing tax returns –
- Remember to incorporate all sources of income – Many people are unaware that interest from fixed deposits is taxable or fail to report it as income in the ITR. Since TDS is deducted, it will be reflected against the respective PAN. Income earned via dividends, freelancing etc or via trading in the stock market must be declared in the ITR. If a salaried person joins a new company, the Form 16 of the old employer should also be considered while filing ITR so that tax is calculated on the consolidated income. If a person has foreign assets or income, those should be declared in the ITR. Non-disclosure of relevant information can lead to trouble with the Income Tax office.
- Be Aware of Various Benefits – The taxman has given some leeway so that you can save some taxes. It is important to be aware of various benefits, exemptions and tax relief measures so that one does not end up paying more tax than one is liable for. Check out if the following are applicable to you –
- Standard deduction of Rs. 40,000
- Claim for Leave Travel Allowance (LTA)
- Tax rebate up to Rs. 12,500
- Concessions for senior citizens’ on interest income and health insurance premium paid
Ensure that you consider rebates, exemptions, deductions etc. as applicable while filing your ITR.
- Fill up the right form for filing ITR –
Hardik says he will use ITR 1 to file his returns since he used it last time. It is not always so straightforward. There have been changes to the forms for this assessment year. Moreover there would be changes in your financial status. You would have bought an additional house or may have started a business. So it is not a good idea to just use the same form as the one last year. Yes! There are many ITR forms and it is not easy to determine which is applicable to you. Check out our post on “There are so many forms! Which Income Tax form should I fill to file my returns in 2018-19?” to know more about which form to fill to file your returns.
If you file returns using a form that is not applicable to you, you can get an Income Tax notice.
- Do not forget to verify return – Submitting the ITR form does not mean you have completed the task of ITR filing. You have to verify it. You will have 120 days to verify your returns. You can use Aadhaar, netbanking, bank account etc. to verify your returns. Do remember that if the tax return is not e-verified within 120 days, the tax return will not be considered valid even if you have paid tax.
- Residential status – If you travel abroad and stay in foreign countries frequently or if you work abroad, check your residential status. There are different ITR forms for Residents and Non-Residents. It is an offence if you fill the wrong form. Check with a tax consultant or a professional financial adviser, if the form you are filling is valid for your status or not.
It is not mandatory for all people to file returns. People with gross income less than Rs. 2,50,000, senior citizens with income less than Rs. 3,00,000 and super senior citizens with income less than Rs. 5,00,000 need not file returns. If you do not fall in this category, please remember to file your returns even if you are not liable to pay any tax. Being regular with taxes will improve your credit score and make it easy for you to get loans etc.
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