Points to be kept in mind before filling Income Tax Return
Introduction
We are well aware that the income tax filing season has started for assessment year 2020-21. Thus, every taxpayer is looking forward to file income tax return on time. This article provides some important points which must be kept in mind before filing the income tax return.
The Selection of Return Form
The first step towards filing a return is the selection of correct form. There are total of 7 forms for filing of income tax as prescribed by the tax authorities. The details whereof are annexed below;
- Individuals and Hindu Undivided Family (HUFs): ITR 1 to 4
- Partnership and Limited Liability Partnership (LLP): ITR 5
- Company: ITR 6
- For claiming Exemption: ITR 7
Points to Remember Filing the Income Return Form
The following are some of the points to remember while filing the income tax form
Disclosure of Interest from Bank Deposits and NSC Certificates
Although the deduction of income received as interest was withdrawn by the IT department a few years ago, still many people choose not to disclose the income earned from such bank deposits and NSC certificates. It does not matter how small the amount is, the interest has to be disclosed in the form. It interest income must not be skipped. In most of the case, the employer may not consider the interest income while calculating TDS of the employee. With regard to interest on Saving Bank Account, the assessee is obliged to claim deduction under the provision of Section 80TTA, Income Tax Act 1961.
Deduction made for investment under 80C, 80CCC & 80 CCD is exempted upto Rs 1.50 lakh
Further, it should kept in mind that the deduction made for investment under Section 80C, Contribution made towards pension fund under Section 80CCC or Contribution by the employer to the pension scheme under Section 80CCD is exempted up to Rs 1.50 lakh. The benefits that comes under Section 80C include tuition fees paid by a parent for his children, repayment of principal amount for home loan taken.
The Clubbing of Income of spouse or minor child
In some of the cases, the income of the minor child and spouse of the taxpayer can be clubbed with his income according to the provisions of the Income Tax Act, 1961. In such case, it is essential that the correct form must be used for filling of income tax return.
To be Cautious while computing Cess and Surcharge
It can be considered as a common mistake while computing the education cess and surcharge on the taxable payable amount. It is to be noted that if the total income exceeds Rs. 100 lakh in a particular assessment year then surcharge of 10% is not required to be added to the tax payable amount. However, the education cess of 4% must be added to tax payable amount even if the total income exceeds 100 lakh in an assessment year.
The correct way to calculate the taxable amount is to first add surcharge of 10% to taxable amount if applicable and then add cess of 4% on the taxable amount.
Safe filing of relevant documents for future requirements
Although the need for attachment of various documents, certificates etc, along with the return form had been dispensed but the documents must not be trashed away as the aforesaid documents may be required in future. It is never known that the tax authorities may need the documents to be submitted by the taxpayer in case of a proceeding of scrutiny which is generally initiated for verification of claims made in the return form.
Double checking of essential information such as bank account details, PAN No., Address for communication etc.
In some cases, the taxpayer may commit mistake while providing the correct PAN number. The 10 digit PAN should be mentioned correctly. Likewise, the communication address has to be mentioned with care as all the notices will be posted by the tax authorities on the provided address. The bank account details also has to be filled correctly in case of a refund proceeding. Due to care must be taken while providing MICR code as the refund amount will be transferred through ECS.
