The season for submitting returns for the AY 2020–21 has officially begun, as is common knowledge. Everyone is now prepared to file their income tax returns by the deadline. Many taxpayers are wishing for an extension of the deadline as the due day for filing tax returns draws near. It is not advisable to file your return in the final few days. It is usually preferable to do these tasks as quickly as possible, regardless of whether there is a delay. Why wait until the final day if you have all the required paperwork? Additionally, it’s now quite simple to file your taxes.
Choosing the Return Form to Be Used
Selecting the appropriate Form of return is the first step in submitting a tax return. The tax authorities have notified seven forms of return. ITR 1 through 4 apply to individuals and HUFs, while ITR 5 is for partnership firms and LLP, ITR 6 is for companies other than those claiming exemptions (See Rule 12), and ITR 7 is for [For persons including companies required to furnish return under Section 139(4A) or Section 139(4B) or Section 139(4C) or Section 139(4D)] (Please see rule 12 of the Income-tax Rules). Consequently, the proper form has to be filled out.
Tips to Make Sure You File It Returns Timely
The following are the 9 Tips to Make Sure You File It Returns Timely:
1. Form 16 or 16A for Salary Breakup
Get your Form 16 or 16A from your employer in the first instance if you are a salaried taxpayer. The assessee is now required to break down his gross pay on the tax forms, noting the several heads of income. The base pay, HRA, and any additional benefits, such as LTA or uniform reimbursement, must all be included. The Form 16 frequently just provides a gross pay amount rather than a comprehensive breakdown. The taxpayer will have to calculate his basic salary backward by deducting the amounts claimed for various exemptions from the gross wage and then declaring the remaining amount. Verify that the income reported on Form 16 or 16A matches the final pay income.
2. Disclosure of Interest from Bank Accounts or NSC Certificates is required
Even though the interest income deduction was eliminated three years ago, many people still fail to report any interest they may have received on bank accounts or NSC certificates. No matter how little it is, such interest must to be reported in the return. Because it is not shown on Form 16, one should not make the error of ignoring interest income entirely. In many instances, the employer may not have taken interest income into account at all when calculating the employee’s TDS. The Assessee may claim a deduction under Section 80TTA for interest on a savings account.
3. The maximum deduction for investments made under Sections 80C, 80CCC, and 80 CCD is Rs. 1.50 lakh.
Additionally, it should be noted that the total deduction for investments made under Section 80C, pension fund contributions made under Section 80CCC, or employer pension plan contributions made under Section 80CCD is limited to Rs 1.50 lakh. A person may also claim a benefit under Section 80C for the cost of their children’s tuition as well as the repayment of the house loan’s principle.
4. Check the Information on Form 26as for TDS and TCS
Check that you have received credit for all of the tax that has been withheld on your behalf before you fill out the form. Each payment made to you is listed on the Form 26AS, together with the TDS applied to those payments. TDS on bond, deposit, and dividend income are all included in this. Details of the tax that was paid at the source will also be included (TCS). On some transactions, such the purchase of foreign currency or the sending of money overseas, TCS is charged. Then, your tax obligation can be reduced using this TCS. Check your Form 26 AS to see if the TDS and TCS deductions are appropriately listed by logging into your Net Banking account or the tax department webpage.
Contact the deductor right away if you discover that some TDS or TCS has not been charged to your account. The TDS or TCS may not have been deposited by the deductor, or the TDS may have been deposited but the statement has not yet been submitted. The erroneous PAN or amount in the TDS statement may also be to blame. One should take early action because it takes 7–10 days for a correction to appear on the Form 26AS.
5. Verify all Important Facts, including PAN numbers, Bank Account Information, Communication Addresses, etc.
It’s possible for certain taxpayers to misrepresent their Permanent Account Number (“PAN”). It is important to fill out the right PAN in legible fashion. Given that all notifications and other correspondence from the tax authorities are mailed to this address, due attention must be used while entering the address. Advertisement The bank account number needs to be entered precisely in the event of a refund. If the refund is chosen to be deposited directly into the bank account via ECS, proper care should be made to enter the MICR code accurately. Any error might result in issues with tax refund credits and subsequent annoyance.
6. When computing Surcharges and Cess, Exercise Caution
Making an error while figuring out the surcharge and education cess on the total amount of tax due is usual. It needs to be mentioned that surcharge of 10 percent is not required to be imposed to the tax if the total income does not exceed Rs 100 lakh. Even if the total income is less than Rs 100 lakh, cess at the rate of 4% must be applied to the tax amount. The right procedure is to first add a 10 percent surcharge to the tax, if applicable, and then to add a 4 percent cess to the total of the tax and surcharge.
7. Purchase Capital Gains Statements from a Broker or MFs
A capital gains statement from your broker and mutual funds is also required if you have invested in equities and mutual funds. Short-term profits from stocks and equity-oriented funds are taxed at 15%, while long-term gains above Rs. 1 lakh are taxed at 10%.
Non-equity funds and other assets, such as gold and real estate, have a higher tax rate and a far more difficult tax computation. While long-term profits are subject to a 20 percent post-indexation tax after being added to income, short-term gains are taxed at regular rates. The ordinary individual won’t be able to determine their mutual fund gains following indexation. Mutual Funds perform this calculation and even provide you with the tax liability.
8. Announce Profits from Crypto Assets
The budget for this year has made it clear how earnings from virtual digital assets, like cryptos, would be taxed. The taxation of earnings from the prior fiscal year, however, is riddled with ambiguity and inconsistencies. Will cryptocurrencies be classified like stocks, with long-term profits up to Rs. 1 lakh tax-free and short-term gains subject to a 15% tax rate? Or will they share the same tax treatment as non-equity assets, short-term profits included in income, and long-term gains subject to a 20 percent after-indexation rate? According to Batra, the agency has recently written to investors with tax notifications, especially requesting an explanation for why their cryptocurrency trading revenue was not reported as capital gains.
9. Furnish Details of Overseas Assets And Income
Foreign assets are truly a minefield full of possible tax blunders. Regardless of the individual’s overall income, any overseas assets, including foreign bank accounts, financial interests, immovable property, accounts in which they have signature power, and any other capital assets they may own outside of India, must be declared in the tax return. Many individuals could be tempted to ignore this because of how difficult the process is. This may be expensive. According to the Black Money (Undisclosed Overseas Income and Assets) and Imposition of Tax Act, 2015, knowingly withholding information about foreign assets may result in significant penalties.