7 Key Precautions To Follow While Filing ITR For Individuals

Filing your ITR requires careful attention and adherence to certain important considerations. In this concise yet informative guide, we will walk you through the essential precautions that every individual, especially salaried taxpayers, should keep in mind when filing their ITR. By following these precautions, you can ensure a smooth and accurate ITR filing experience while staying compliant with tax regulations. Let's dive in and empower you with the knowledge you need to confidently file your ITR.

Choosing the Right Tax Return Form:

The first crucial step in filing your Income Tax Returns (ITR) is to identify the appropriate form that matches your tax situation. For the Assessment Year (AY) 2023-24, the ITR-1 or Sahaj form is applicable to resident individuals whose total income includes:

• Salary or pension income.
• Additional income from various sources (excluding lottery winnings and income from racehorses).
• Income from a single-house property (except in cases where losses are carried forward from previous years).
• Agricultural income up to Rs 5,000.

On the other hand, the ITR-2 form is meant for individuals or Hindu Undivided Families (HUF) with the following income sources:

• Salary or pension income.
• Overseas income or assets held in a company.
• Individuals holding directorship.
• Income from capital gains.
• Income from multiple properties.
• Agricultural income exceeding Rs 5,000.
• Lottery winnings and income from racehorses.

Additionally, if you are a resident not ordinarily resident (RNOR) or a non-resident who has invested in unlisted equity shares at any point during the fiscal year, specific considerations apply.

Considering All the income sources.

Another important step when preparing your Income Tax Return (ITR), is crucial to take into account all your sources of income. This includes income from both your current and previous employment, as well as any income generated from investments. 

Accurately reporting your income is vital, and using the appropriate ITR form for your specific situation is important. Failure to report any income from a previous job can lead to a mismatch between the information provided in your TDS certificate (Form 16) and your Form 26AS. 

This discrepancy may catch the attention of the tax department, resulting in a tax demand notice being issued to you. This notice will require you to pay any additional tax dues that may be applicable based on the unreported income.

Do a thorough Analysis Of Form 16

Form 16 serves as a significant document provided by your employer, highlighting your salary income and the corresponding tax deductions made at source (TDS). It is crucial to carefully review the details mentioned on Form 16 and cross-verify them with other relevant documents such as Form 26AS and your own records.

Pay close attention to the salary figures and deductions reflected on Form 16, ensuring their accuracy and alignment with your actual income and investments. It is important to note that certain deductions, such as self-occupied house property interest and 80CCD(1B) National Pension System (NPS), may not have been included by your employer but can still be claimed by you.

By conducting a thorough analysis of Form 16 and cross-checking it with other supporting evidence, you can ensure that all eligible deductions are accounted for and maximize your tax benefits appropriately.

Choosing Between the Old and New Tax Regimes

In Budget 2020, the Government of India introduced a revised optional tax regime that offers individuals lower tax rates. However, opting for this regime requires forgoing certain exemptions and deductions available under the old tax regime. 

It is crucial to carefully evaluate and compare your tax liabilities under both regimes before making a decision. Consider analyzing the potential impact on your overall tax liability by assessing the exemptions and deductions that you currently claim under the old regime. 

Compare this with the lower tax rates offered in the new regime. Depending on your specific financial circumstances, such as your income sources, investments, and eligible deductions, you can determine which regime is more advantageous for you.

Review All the Deductions Thoroughly

Another precaution is to examine all tax deductions, ensuring that they are accurately reflected in your documentation and supporting evidence. Sometimes, certain deductions may not be included in your Form 16, resulting in excess tax deductions. 

In such instances, you have the opportunity to claim these deductions while filing your Income Tax Return (ITR). However, it is important to emphasize the importance of reporting only legitimate deductions that you have actually made during the fiscal year. 

Filing fictitious deductions can lead to potential penalties or legal consequences. Therefore, exercise caution and integrity when reporting deductions, ensuring they are supported by valid evidence and comply with tax regulations.

Understanding The Form 26AS, AIS, and TIS

The tax deducted from your income by your deductor and subsequently deposited with the government should be reflected in your Form 26AS tax credit statement. 

Additional information about your financial transactions can be found in your Annual Information Statement (AIS) and Tax Information Statement (TIS). It is important for you to verify whether all entries in these forms are correctly accounted for in your Income Tax Return (ITR). 

Please note that if certain income entries in these forms do not pertain to you, you can disregard them. However, if there is income that is not shown in these forms, it should be reported in your income tax return.

Take Your Time When Filing Your ITR:

One of the most frequent mistakes individuals make when filing their Income Tax Returns (ITRs) is not being patient. Waiting until the last minute and then hastily completing the filing can result in errors and potential issues, such as incorrect filings or notices from the Income Tax Department.

Rather than procrastinating until the due date approaches, it is advisable to start the process well in advance. By doing so, you can avoid unnecessary stress and have ample time to thoroughly understand the form's instructions and requirements.

Remember, taking the time to file your ITR diligently and accurately can help prevent mistakes and ensure compliance with tax regulations. 

Conclusion: 

Summing it up, adhering to these precautions will ensure a smooth and precise filing of your Income Tax Return (ITR). Remember, fulfilling your tax obligations is not just a legal requirement but also contributes to the progress of the nation. When filing your ITR online, you may encounter various challenges.

 Myitronline provides valuable information to help resolve such issues efficiently. Rest assured, the company is committed to spreading accurate details among taxpayers.

Also Read: ITR Document Checklist For Financial Year: 2022-23 (Assessment Year: 2023-24)

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