We are again at the tax filing time of the year and the due date of July 31 is just a few days away. It is mandatory for individuals to file the return electronically if the taxable income exceeds Rs 500,000. It is important to furnish the information accurately for speedy and error-free processing. As most of us tend to file the return at the last minute, there are greater chances of minor errors while filing the returns electronically. Some of the important considerations for error-free tax filings are outlined below.
To begin, select the appropriate return form, based on the streams of income. For instance, ITR-1 (Sahaj) is applicable for individuals with salary income, income from other sources and income/loss from one house property. ITR-2 is applicable if you have capital gains/loss, income from more than one house property, foreign assets, brought forward losses, exempt income of more than Rs 5,000 etc.
Furnish the personal information accurately like PAN, address, e-mail ID, mobile number, residential status, bank account details, etc. Providing accurate details like bank account information and address would ensure timely refund.
Disclosure of correct and accurate income is mandatory. The income disclosed in the total income schedule should match with the income in various schedules like salary, house property, capital gains, other sources, etc. Also, the losses should be appropriately disclosed in the respective schedules to ensure carry-forward to subsequent years.
Ensure all taxes paid/deducted at source have been properly claimed in the return. As a good practice, taxes paid should be verified with Form 26AS to avoid any future demand/short payment of refunds. Also, the details of self-assessment tax and advance tax should be reported at the appropriate place.
Disclosure of foreign assets, bank accounts and foreign trusts are mandatory for individuals qualifying as Resident and Ordinarily Resident in India. Also, declare the exempt income such as dividend income, interest income exempt from tax,etc, though this is not taxable.
In addition, it is important to maintain the back-up documents like Form 16, lease agreements, bank statements or other income details which might be required if the returns are selected for scrutiny by the tax office.
The time spent before filing of a tax return is important and works like the 'Stitch in time saves nine' reminder.
The author is tax partner, Ernst & Young. This is the first of a three-part series on how to file tax returns