Tips to file error-free income tax returns

The due date for filing tax returns for most individuals is July 31

The income tax returns form for FY2017-18 was notified last month, and the schema released for ITR 1. The schemas of the other ITRs are expected to be released shortly.

With these, the tax-filing season is officially here.

The due date for filing FY 2017-18 tax returns for most individuals is July 31, 2018, with those whose total income exceeds ₹2.5 lakh having to mandatorily file tax returns.

The limit is ₹3 lakh for senior citizens (aged 60 to 79 years) and ₹5 lakh for super-senior citizens (aged 80 years and above).

The Centralized Processing Centre (CPC), Bengaluru, of the Income Tax Department has issued a ‘Cautionary Advisory’ to taxpayers, especially the salaried class, warning them of certain penal consequences of incorrect reporting in ITR.

Notably, there is no change in law with respect to the penalty for incorrect filing.

But in the wake of such a directive, it becomes imperative to consider what are some of the important aspects of filing returns, which you cannot afford to ignore.

On time

Make sure you file the ITR if your income crosses the basic threshold limit of ₹2.5 lakh. A delay in filing can invite a penalty of up to ₹10,000, under Section 234F of the Income Tax Act.

Form 16

The ITR 1 Form requires a break-up of your salary income. Therefore, you may have to rely on your Form 16 to a great extent to provide all these details.

Form 26AS

Form 26AS, which is available for download from the income tax portal is another crucial document that can aid in your return filing.

This form comprises details of the tax deducted on your income sources — salary, interest, professional receipts, etc.

You can reconfirm the Tax Deducted at Source (TDS) reflected in your Form 16 with the one in Form 26AS.

Additionally, Form 26AS helps you get details of other incomes which you ought to disclose in your returns, and claim the credit of the TDS made on these.

However, do note that no TDS gets cut on interest from savings accounts, and therefore make sure you disclose this income in your returns.

Even if no tax is due on it, since you are claiming the deduction available to you under Section 80TTA of up to ₹10,000, you must claim it via your ITR filing.

Claiming exemptions

During FY2017-18, you may have made investments in tax-saving instruments which allow you to claim a deduction under Section 80C.

Ensure you claim exemption to the extent you have made the investment and provide the evidence to substantiate such investments, if at all called for by the income-tax authorities later on.

Tax breaks on reimbursements for medical expenses and Leave Travel Allowance can only be claimed via the employer. These cannot be claimed at the time of filing tax returns.

Disclose all your income

Make sure to disclose all your sources of income in your ITR form. If you are a salaried individual who also has income from another business/profession, choose the appropriate form to file your return — ITR 3 or ITR 4 (if you opt for presumptive tax).

In case your choose ITR 1, and do not disclose your income from business/profession, this would be against the law and likely attract penalties.

You must also bear in mind that you must disclose even exempt income, if any. Say, even in case of capital gains, one must disclose and claim the exemption in the returns itself. For example, if you sell a property and claim an exemption by reinvesting the gains entirely, disclose this in the return as it will also help justify your claim of TDS on the consideration received on the property sale.

Furnish correct details

It is essential that you furnish accurate bank account details — IFSC code, bank name, bank account number, etc — to ensure prompt refunds. The ITR forms allow non-resident Indians to give details of bank accounts outside India, IBAN or SWIFT code of the bank, to receive the refunds directly.

Though the I-T department has issued the advisory cautioning taxpayers of severe penal consequences on incorrect return filing, in our view, these are directed towards taxpayers who intentionally manipulate numbers, suppress facts, and inflate investments and expenses for tax evasion.

Given that you still have about three months for return filing, do not panic. Start equipping yourself with all the requisite details/documents that will ease your return-filing experience and help keep it error-free.

Stick to the tips and be a compliant tax filer.

The writer is founder and CEO of ClearTax.

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