ITR filing: It is the duty of every responsible citizen to file their ITR and report their income. Besides being a vital contribution to nation building, it also helps the individual in a number of ways, such as in the processing of loans, carrying forward of losses, and for visa and credit card applications.
Filing your income tax return can be a daunting task for those who are not well versed with the procedure. A complex and technical procedure, there is a very high chance for making errors by providing inaccurate or incomplete information.
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Assesses should be prepared, with certain documents and data on hand before they begin the filing procedure.
Here are the 10 things one should take note when undergoing the process:
1. Dates for filing ITR for FY 2021
The due date for filing ITR is December 31, 2021, with the last date being March 31, 2022. It is wise to set a personal deadline for filing by the beginning of March, in case there are documents that you need to locate, or an emergency towards the latter half of the month impedes with the filing. Keeping the filing for the last minute could also result in hasty and inaccurate data consolidation.
2. Who is Liable to File ITR in India?
Individuals below the age of 60 years, who have a total income exceeding Rs 2.5 lakh in a financial year (excluding exemptions and deductions) are liable to file their returns.
For individuals between the ages of 60 and 80, the income limit is Rs 3 lakh, and for those above the age of 80, it is Rs 5 lakh.
3. How to Avoid TDS if you have a low income
For those individuals who have a low income, filling the forms 15G and 15H will help in avoiding the deduction of TDS. These are self-declaration forms that an individual submits to the bank requesting not to deduct TDS on interest income as their income is below the basic exemption limit.
4. How to Prepare for Filing ITR
For salaried individuals, your employer will provide you with Form 16, and you have to keep your bank statement on hand.
Professional freelancers who have a turnover of above Rs 50 lakh file a simple form. They do not need to report separate expenses, they can claim 50 percent as expenses and the remainder can be considered their income, on which the tax will be calculated.
5. Important Documents to Keep Ready
While filing your ITR, keeping all the documents needed ready will speed up the process and also make it much smoother. The following documents should be kept on hand:
- Form 26AS, which can be downloaded from the income tax website
- Form 16
- Bank Statements for the year
- Capital Gains Statement for Mutual Funds
6. Common Mistakes to Avoid
The most common mistakes people make while filing their ITR is forgetting to enter certain incomes, such as rental income, and forgetting to claim deductions from their employer. Another element to keep an eye out for is the correct bank information such as IFSC code, etc.
Certain other items that are frequently overlooked are claims for bills to their employer, these include HRA, LTA, broadband connection etc. Incomes and losses should also be reported. Another point to remember is that anyone can claim for the school fees paid for their children, a universal claim applicable to all.
7. Old Regime vs New Regime
Salaried individuals can switch between the regimes every year, as per their benefit. For those with a salary above Rs 12.5 to 15 lakh, it is beneficial to choose the old regime, and for those with a salary above Rs 30-40 lakh, the new regime is more suitable.
For those running a business, the regime can only be switched once in a lifetime.
8. New Rules in ITR Filing
One of the new regulations in ITR filing is that dividend income is also taxable and the company does not pay for the dividend. TDS will be applicable if the dividend income exceeds Rs 5,000.
9. Tax on cryptocurrency and US Capital
Crypto currency is not part of the exemption list, and there is no separate section for the same to be reported.
US Capital gains can be reported under the Capital Gains Section, as one would report any other capital gains.
10. Best Way for Tax Saving
The best way to save on tax is by structuring your salary to maximize the tax benefits that are available. Be sure to claim all the deductions you are eligible for.
It is the duty of every responsible citizen to file their ITR and report their income. Besides being a vital contribution to nation building, it also helps the individual in a number of ways, such as in the processing of loans, carrying forward of losses, and for visa and credit card applications. While it may seem to be a tedious task, keeping all the documentation and information on hand, can make filing a smooth and simple process.
This has been authored by Paisa Vaisa on IVM Podcasts
(Edited by : Anshul)