Filing income tax returns diligently is as important as investing in tax-saving instruments. An error can cost you both time and money. Here is a list of things to remember while filing income tax returns:
It is advisable to have a checklist of documents needed for filing returns to avoid mistakes. Some must-haves are:
- Form 16 – issued by your employer. It contains your salary and Tax Deducted at Source (TDS) details. If you have changed jobs in a financial year, then collect one from each employer.
- Form 16A – issued by the bank(s) where you hold your fixed deposits. It contains TDS details on the interest earned.
- Bank statements – savings, current and fixed deposits.
- Proof of any other income like dividends or gifts.
- For capital gains tax – documents of sale of property, shares or mutual funds units.
- Documents of all tax-saving investments made during the financial year.
While the list is not exhaustive, you can add/delete details and make one that suits your requirement.
E-filing of returns
Filing your returns online reduces the risk of errors as there are checks in place to minimise rework. Electronic checking of the application ensures that the errors, if any, can be corrected before submission. The government has mandated that all returns with a gross total income of above Rs. 5 lakhs or returns with a refund application MUST be filed online.
List of Bank Accounts
It has been made mandatory to provide a list of all bank accounts held by you while filing returns. You need to mention:
- Name of the Bank
- Account Number
- IFSC Code
- Nature: Savings or Current
Accounts which have been dormant for over 3 years need not be mentioned in the list.
Short term losses
While most of us are aware of capital gains tax, few know that short-term losses incurred on listed equity can be set-off against capital gains. These losses can also be carried forward to the next financial year.
Form 10E – Arrears
There can be times when you might receive salary arrears or some dues late. Section 89(1) of the Income Tax Act 1961, allows you to claim tax relief in such scenarios. This is to ensure that you don’t pay extra tax due to a delay in receiving the payments. You must fill Form 10E on the income tax website for the same.
The government has made it mandatory to report foreign assets and/or income. Even if you don’t have a taxable income, you must report foreign bank accounts, properties or foreign stocks.
It does help if you plan your IT returns with the help of a financial advisor or a chartered accountant.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.