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ITR filing: A 9-point checklist to help you submit your income tax return in 30 minutes or less

Many individuals are hopeful that the deadline for filing tax returns will be extended as the deadline approaches. Our advice is to file your tax return as soon as possible. Whether an extension is granted or not, it is usually preferable to get these things out of the way as soon as feasible. Why wait until the last minute if you have all of the relevant documents? Furthermore, submitting your tax return has been fairly simple in recent years. If everything is readily available, the entire operation should not take more than 30 minutes. Check out our checklist of nine things to remember as you prepare to file.These methods will assist you in preparing a faultless ITR and ensuring a seamless filing process.

Obtain Form 16 or Form 16A for Salary Breakup.

The initial step for salaried taxpayers is to get their Form 16 or 16A from their employer. The tax forms now demand the assessee to break down his total wage and list the numerous sources of income. You must include the base pay, HRA, and any additional allowances, such as LTA, uniform allowance, and so on. In many circumstances, Form 16 will simply provide a gross pay amount rather than a comprehensive breakdown. The taxpayer must work backward by deducting the amounts claimed for different exemptions from his gross wage and declaring the remaining as his basic salary.Check that the final salary income matches that on Form 16 or 16A.

Some exemptions, such as HRA, can be claimed when filing taxes even if they are not listed on Form 16. However, it is preferable to provide the necessary information to your organization so that the exemption is accounted for in the Form 16 numbers. It has been noted that tax returns with claimed income, exemptions, and deductions that match those on Form 16 are processed more quickly and without a hitch.

  • Your gross total income (before deductions and exemptions) surpassed the Rs.2.5 lakh basic exemption limit (Rs.3 lakh for senior citizens and Rs.5 lakh for very senior citizens under the old tax regime).
  • Your company’s total sales, turnover, or gross revenues exceeded Rs.60 lakh.
  • Your total gross earnings from your career surpassed Rs.10 lakh.
  • You spent nearly Rs.2 lakh on international travel.
  • You put Rs.50 lakh in a savings account and Rs.1 crore in a current account.
  • Your electrical bills totaled above Rs.1 lakh.
  • You have international assets or income, or you have signing power over a foreign bank account.
  • Your TDS or TCS was Rs.25,000 or higher (Rs.50,000 for senior people).
  • You must request a refund of TDS or TCS paid.

CHECK TDS AND TCS DETAILS IN FORM 26AS

Check to see if all of the tax deducted on your behalf has been reimbursed to you before completing the form. The Form 26AS contains information about all payments received to you as well as the TDS on these payments. TDS on interest on savings and bonds, as well as dividend income, are included. It will also provide information on tax collected at the source (TCS). TCS is paid on some transactions, such as money transfers overseas or the purchase of foreign currency.This TCS can subsequently be used to your tax liability. You can access your Form 26 AS via the tax department online or your Net banking account to ensure that the TDS and TCS deductions are appropriately shown.

If you discover that some TDS or TCS has not been credited to you, please notify the deductor right away. “Perhaps the deductor did not deposit the TDS or TCS, or perhaps the TDS was deposited but the statement was not filed.” It might also be owing to an inaccurate PAN or amount in the TDS statement,” explains Archit Gupta, CEO of tax filing service Cleartax. “A revision takes roughly 7-10 days to reflect in the Form 26AS, thus one should move soon,” says Tilotama Gourisaria, Partner at Kolkata-based Agarwal Lodha & Co.

IN AIS, MATCH INCOME AND TDS, TCS DETAILS

After you’ve double-checked the TDS and TCS information on Form 26AS, compare it to the information on the Annual Information Statement (AIS). The AIS, which was introduced last year, is a complete account of all financial transactions made by an individual over the year. It contains information on all of the individual’s earnings (including salary, profession, rent, interest, and so on) from numerous sources. It also includes information on where and how much the individual invested and spent over the year (see graphic).

Although the AIS includes all potential financial transactions, it is still a work in progress, and certain information may be missed. “The AIS relies on data from a variety of sources. “It will take some time to consolidate all of the information in one place,” says Sudhir Kaushik, CEO of Taxspanner, a tax filing service. In reality, the tax department’s AIS Handbook expressly indicates that “there may be further transactions connected to the taxpayer that are not now visible in AIS.”

The taxpayer is obliged to double-check all relevant information and present complete and correct information on his or her income tax return.” Mismatches may occur because the government’s system does not get comprehensive information. “When submitting ITRs, taxpayers should depend on the real transaction numbers rather than the AIS numbers,” explains Gupta of Cleartax. “The AIS may be updated in the future even after a return has been filed,” explains Chartered Accountant Karan Batra. The good news is that taxpayers may provide comments on the AIS information. “A taxpayer has the option of responding whether the information is valid, somewhat correct, or erroneous.” “The mismatch might be highlighted in the feedback,” Gourisaria says.

GET CAPITAL GAINS STATEMENTS FROM BROKERAGE COMPANIES AND MFs

If you own stocks or mutual funds, you must get a capital gains statement from your broker and mutual funds. Long-term profits from stocks and equity-oriented funds over Rs.1 lakh are taxed at 10%, while short-term gains are taxed at 15%.

Non-equity funds and other assets, such as gold and real estate, have a higher tax rate and a significantly more difficult tax computation. Short-term gains are added to income and taxed at regular rates, whilst long-term gains are taxed at 20% after indexation. The typical person will be unable to compute his mutual fund gains after indexation. Fortunately, mutual funds compute this for you and provide you with the tax liability.You may see your mutual fund’s capital gains statement in minutes by logging in. A consolidated statement from a mutual fund transfer provider, such as Computer Age Management Services, is a preferable option. The statement is delivered to your inbox within minutes after your request. Similarly, stock brokers issue capital gains statements for all trades made during the year.

Furthermore, these capital gains statements can be uploaded to tax filing websites, where the required information is retrieved and appropriately incorporated into the tax return. If your stockbroker does not provide the information in the format needed by the tax filing portal, you will have to enter it manually or save it in a suitable Excel file.

Even though you lost money on equity investments last year, don’t overlook this.

“Losses can be offset by gains from other assets.” Losses can be carried forward for up to eight fiscal years,” explains Amit Maheshwari, Partner at AKM Global.

INCLUDE DEPOSIT INTEREST AND BANK BALANCE

Many people fail to record additional sources of income, such as interest on deposits and savings accounts, on their tax forms. There was a period when they could get away with it if they spread deposits across numerous banks to avoid TDS. This is no longer an option. “The AIS includes information on all of a PAN cardholder’s incomes.” “Every rupee gained as interest will be shown in the AIS,” says Taxspanner’s Kaushik. Even if you have many deposits with various banks and no TDS has been deducted, the interest earned would be shown on the AIS.

Don’t forget to include the interest on tax-free choices like the PPF and Sukanya Samriddhi Yojana in your tax return. While this will not increase your tax obligation, you will be able to explain where the money came from when the account matures in a few years.

DECLARE CRYPTO ASSET INCOME

The budget for this year has established how earnings from virtual digital assets, such as cryptocurrency, would be taxed. However, the taxation of profits from the prior fiscal year is befuddling and contradictory. Will cryptos be treated like stocks, with long-term profits of up to ‘1 lakh tax-free and short-term gains taxed at 15%? Or will they be treated the same as non-equity assets, with short-term profits added to income and long-term gains taxed at 20% after indexation? According to Batra, the department has expressly asked investors in recent tax letters why their revenue from crypto trading has not been reported as capital gains. “As a result, it is preferable to report this income as capital gains,” he explains.

Taxspanner’s Kaushik encourages taxpayers to play it safe and pay the 30 percent tax on earnings outlined in this year’s budget. His reasoning: this year’s budget classified virtual digital assets in the same category as lotteries. While the law is not retroactive and takes effect on April 1st of the current year, there is no reason to presume a different tax treatment for prior years.

Another, more significant issue has arisen. “It is unclear if cryptos would be classified as Indian or foreign assets.” Crypto investors must report their holdings in their returns if they are considered a foreign asset (if remittances are received in foreign currency). Failure to report foreign assets may subject persons to harsh penalties under the Black Money Act,” warns Aditya Agarwal, Partner at Mahesh K Agarwal & Co. He believes it is important to register cryptocurrency holdings as foreign assets in Schedule FA to avoid future legal issues.

PROVIDE DETAILS ON FOREIGN ASSETS AND INCOME

Foreign assets are a minefield riddled with potential tax blunders. Regardless of the individual’s overall income, all overseas assets, including foreign bank accounts, financial interests, immovable property, accounts in which an individual has signature power, and any other capital asset owned by the individual outside India, must be mentioned in the tax return. Given the task’s difficulty, many people may be inclined to skip this step. This may be expensive. Willfully withholding reporting on foreign assets can result in harsh penalties under the Black Money (Undisclosed Foreign Income and Assets) and Tax Imposition Act of 2015.

“Misreporting can result in penalties under the Black Money Act of up to ’10 lakh per year.” The undeclared income will be taxed at 30% without any deductions and subject to a penalty of up to 90%. It may potentially result in a seven-year jail sentence,” warns Gupta of Cleartax. Don’t expect to get away after the return is processed. “Cases can be examined up to 16 years later, and penalties can be imposed for failure to disclose foreign assets,” explains Kaushik.

VERIFY DEDUCTIONS AND EXEMPTIONS IN FINAL FORM

Don’t rush to file your return once you’ve completed all of the details. Filing a tax return has gotten simpler in recent years, due to pre-filled forms and the integration of data from several sources. Despite this, numerous taxpayers have reported anomalies in the AIS and errors in their tax returns. “Use the pre-fill option with caution,” warns Kaushik. “Make certain that no deduction or exemption has been overlooked.” Before submitting the form, carefully review each part to ensure that all of the information is right.

Paying a finance specialist to assist you with the process is a fantastic option. Tax portals charge a nominal fee for aided filing, which involves having a tax professional review your return before submitting it to the department. “Taxpayers’ understanding is limited to the fundamental aspects of tax laws.” “Tax specialists bring value and save you time and money,” Maheshwari explains. It’s a tiny price to pay for the assurance that your tax return is error-free and will not result in a notice.

FILE THE ITR V TO VERIFY THE TAX RETURNS.

The ITR submission is not the end of the tax filing procedure. A critical step is still missing. You must authenticate your return within 120 days after submitting it. If the return is not confirmed within this time frame, it becomes invalid and you may be penalized for failure to file. There are six methods for verifying your tax return.

  • Aadhaar-based OTP: Your cellphone number and PAN must be connected to your Aadhaar for this to work.
  • Net banking: Verify the return by going into your Net banking account and accessing the tax filing portal.
  • Bank account: Use your bank account to generate an Electronic Verification Code (EVC). You must have a pre-validated bank account for this.
  • To produce an EVC from a Demat account, follow the same steps as with a bank account
  • Bank ATM: Your ATM card may create an EVC, however only a few banks offer this service

ITR-V has been signed: Send a signed copy of your ITR-V to CPC, Post Box No. 1, Electronic City Post Office, Bengaluru – 560100, Karnataka.

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