Summary: Article provides a checklist of important points for filing an Income-tax Return under the Income-tax Act, 1961. It highlights matters that taxpayers should review before filing, including taxability of interest on excess EPF/VPF contributions, disclosure of foreign assets and income, capital gains exemptions under Sections 54, 54F and 54EC, set-off and carry forward of losses, disclosures relating to company directorships and unlisted equity shares, DTAA benefits, foreign tax credit, reconciliation of AIS, TIS and Form 26AS, reporting of bank interest, ESOPs, RSUs, home loan benefits, house property income, gifts, minor child income, agricultural land transactions, virtual digital assets, selection of the tax regime under Section 115BAC, TCS on foreign remittances, travel and motor vehicle purchases, reporting of high-value transactions, reconciliation of TDS, advance tax and self-assessment tax, disclosure of income from other sources, Schedule AL reporting for specified high-income taxpayers, and review and rectification of AIS information by comparing it with supporting records and submitting feedback where required before filing the return.
25 Important Points to Consider While Filing ITR
The following checklist highlights important provisions that taxpayers often overlook while filing their returns.
1. Taxability of Interest on Excess Provident Fund Contribution
Relevant Sections:
- Section 10(11)
- Section 10(12)
- Rule 9D of Income-tax Rules
Interest earned on employee’s contribution to EPF/VPF exceeding ₹2,50,000 during the financial year (₹5,00,000 where there is no employer contribution) is taxable.
Action Points:
- Verify employee contribution to EPF and VPF.
- Include taxable interest under “Income from Other Sources”.
- Review annual PF statement carefully.
2. Disclosure of Foreign Assets and Foreign Income
Relevant Provisions:
- Schedule FA of ITR
- Section 139(1)
- Section 42 and Section 43 of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
Resident and Ordinarily Resident (ROR) taxpayers must disclose foreign assets held at any time during the year.
Commonly Missed Assets:
- Foreign bank accounts
- ESOPs/RSUs of overseas companies
- Foreign brokerage accounts
- Overseas immovable properties
- Foreign pension accounts
- Foreign cryptocurrency wallets
Consequence:
Non-disclosure may attract a penalty of ₹10 lakh per default year under the Black Money Act.
3. Exemption from Capital Gains on Purchase of Residential Property
Relevant Sections:
- Section 54
- Section 54F
- Section 54EC
- Capital Gains Account Scheme (CGAS)
If long-term capital gains arise on transfer of eligible assets, exemption may be available upon reinvestment in specified assets.
Common Situations:
- Sale of house property and purchase of another house.
- Sale of shares and investment in residential property.
- Investment in 54EC bonds.
4. Set-Off and Carry Forward of Losses
Relevant Sections:
- Sections 70 to 80
- Section 72 (Business Loss)
- Section 74 (Capital Loss)
- Section 71B (House Property Loss)
- Section 32(2) (Unabsorbed Depreciation)
Taxpayers should review brought-forward losses and current year losses before filing the return.
Commonly Ignored:
- F&O losses
- Business losses
- Capital losses from shares and mutual funds
- House property losses
Important:
Return must generally be filed within the due date under Section 139(1) for carrying forward certain losses.
5. Director in a Company
Relevant Provision:
- Disclosure requirement under ITR Forms notified by CBDT
Any person who was a director in a company during the year must furnish:
- DIN
- Name of company
- Director status
This applies even if the company is inactive or privately held.
6. Holding of Unlisted Equity Shares
Relevant Provision:
- Disclosure requirement in ITR
Taxpayers holding unlisted equity shares at any time during the year must disclose:
- PAN of company
- Opening shareholding
- Shares acquired
- Shares transferred
- Closing shareholding
Commonly Missed By:
- Startup investors
- Promoters
- Family-owned businesses
7. DTAA Benefits for Non-Residents
Relevant Sections:
- Section 90
- Section 90A
- Section 91
- Rule 128 (Foreign Tax Credit)
Non-residents should verify whether tax charged in India can be reduced under an applicable Double Taxation Avoidance Agreement (DTAA).
Income Categories:
- Dividends
- Interest
- Mutual fund income
- Royalty
- Capital gains
Documents:
- Tax Residency Certificate (TRC)
- Form 10F
8. Claim Foreign Tax Credit (FTC)
Relevant Provisions:
- Section 90
- Section 91
- Rule 128
- Form 67
Where foreign income is taxable in India and taxes have already been paid abroad, FTC may be available.
Commonly missed by:
- Employees on overseas assignments.
- Individuals receiving foreign dividends.
- NRIs becoming residents.
9. Reconcile AIS, TIS and Form 26AS
Relevant Sections:
- Section 285BB (AIS)
Before filing, reconcile:
- Interest income
- Dividend income
- Securities transactions
- Property transactions
- Foreign remittances
Mismatch may lead to notices.
10. Savings Bank and Deposit Interest
Relevant Sections:
- Section 56
- Section 80TTA
- Section 80TTB
Income from:
- Savings accounts
- Fixed deposits
- Recurring deposits
is taxable even where TDS is not deducted.
11. ESOPs, RSUs and Foreign Stock Holdings
Relevant Sections:
- Section 17(2)
- Section 45
- Schedule FA
Employees receiving stock-based compensation should verify:
- Perquisite taxation at vesting
- Capital gains on sale
- Foreign asset disclosure requirements
12. Home Loan Benefits
Relevant Sections:
- Section 24(b)
- Section 80C
- Section 80EEA (where applicable)
- Section 80EE (where applicable)
Review:
- Home loan interest
- Principal repayment
- Additional housing loan deductions
13. House Property Reporting
Relevant Sections:
- Sections 22 to 27
Points to review:
- Self-occupied houses
- Let-out properties
- Deemed let-out properties
- Co-owned properties
Multiple property owners frequently under-report this information.
14. Gifts Received During the Year
Relevant Section:
- Section 56(2)(x)
Taxability may arise where money, immovable property, shares or other assets are received without consideration or for inadequate consideration.
Review:
- Gifts from non-relatives
- Family settlements
- Property transfers
15. Minor Child Income
Relevant Sections:
- Section 64(1A)
- Section 10(32)
Income earned by a minor child may require clubbing with the parent’s income.
Examples:
- Interest income
- Dividend income
- Mutual fund investments
16. Agricultural Land Transactions
Relevant Sections:
- Section 2(14)
- Section 45
Determine whether agricultural land qualifies as a capital asset.
Many taxpayers incorrectly assume all agricultural land sales are exempt. If there are agriculture income in addition to other income like salary, income from other sources or rental income, there may be tax liability under aggregation method of computation. Many taxpayers wrongly consider that agriculture income is tax exempt and skip disclosure of the same.
17. Virtual Digital Assets (Crypto)
Relevant Sections:
- Section 115BBH
- Section 194S
Review:
- Crypto purchases and sales
- NFT transactions
- TDS deducted under Section 194S
Loss adjustment restrictions must also be considered.
18. Verify Correct Tax Regime
Relevant Sections:
- Section 115BAC
Compare tax liability under:
- Old Regime
- New Regime
before filing the return.
Many taxpayers overlook deductions available under the old regime and end up paying higher tax.
19. TCS on Foreign Remittances and Travel
Relevant Section:
- Section 206C(1G)
Verify credit of TCS collected on:
- Foreign remittances
- Overseas tour packages
- Foreign education remittances
TCS is only a tax credit and should be claimed appropriately.
20. High-Value Transactions Reporting
Relevant Provisions:
- Statement of Financial Transactions (SFT)
- Section 285BA
Review transactions such as:
- Property purchase or sale
- Large cash deposits
- Mutual fund investments
- Bond investments
- High-value credit card payments
These are generally reported to the Income-tax Department.
21. Verify TDS, Advance Tax and Self-Assessment Tax
Relevant Sections:
- Section 199
- Section 140A
- Sections 207 to 211
Reconcile:
- Form 26AS
- AIS
- TDS certificates
- Advance tax challans
- Self-assessment tax payments
before filing the return.
22. Disclosure of Income from Other Sources
Relevant Section:
- Section 56
Frequently missed items include:
- Family pension
- Dividend income
- Interest on income-tax refund
- PF taxable interest
- Bond interest
- Peer-to-peer lending income
23. Disclosure of Assets and Liabilities for High-Income Taxpayers
Relevant Provision:
- Schedule AL (Assets and Liabilities) in the ITR
Individuals and HUFs having total income exceeding ₹1 Crore (before claiming certain deductions and exemptions, as prescribed in the applicable ITR form) are required to furnish details of specified assets and liabilities in Schedule AL. (https://www.incometaxindia.gov.in/w/8schedule_al)
Assets Required to be Disclosed:
- Immovable properties (land, house, commercial property)
- Bank balances
- Cash in hand
- Jewellery, bullion and precious articles
- Motor vehicles, yachts, boats and aircraft
- Shareholdings and securities
- Insurance policies
- Loans and advances given
- Capital in firms/LLPs
- Other financial assets
Liabilities Required to be Disclosed:
- Housing loans
- Vehicle loans
- Loans against investments
- Other outstanding borrowings relating to disclosed assets
Common Errors:
- Non-disclosure of jointly owned properties.
- Ignoring investments held in demat accounts.
- Reporting book values instead of cost values.
- Omitting loans and advances given to relatives or group entities.
- Failure to update assets acquired during the year
24. TCS on Purchase of Motor Vehicle
Relevant Provision:
Section 206C(1F) of the Income-tax Act, 1961
TCS is collected by the seller on the sale of a motor vehicle where the sale consideration exceeds the prescribed threshold.
Action Points:
- Verify whether TCS has been collected by the vehicle dealer.
- Match the TCS amount with Form 26AS and AIS.
- Claim the credit while filing the return.
- Ensure that PAN was correctly quoted at the time of purchase.
Common Situations Where Taxpayers Forget to Claim Credit:
- Purchase of luxury cars.
- Purchase of vehicles in individual capacity but used for business purposes.
- Vehicles purchased towards the end of the financial year.
- Cases where the vehicle is registered in the name of a proprietor but accounted for in the business books.
Documentation to Verify:
- Vehicle purchase invoice.
- TCS certificate (if issued).
- Form 26AS.
- AIS/TIS.
Practical Tip:
Many taxpayers look only at TDS deducted by employers and banks and overlook TCS credits appearing in Form 26AS. Any TCS collected on motor vehicle purchase can be claimed as a tax credit against the final tax liability, potentially resulting in a lower tax payment or higher refund.
25. Review and Rectify Errors in AIS Before Filing the Return
Relevant Provision:
Section 285BB of the Income-tax Act, 1961
The Annual Information Statement (AIS) contains information received by the Income-tax Department from banks, financial institutions, employers, registrars, stock exchanges, mutual funds, property registrars and other reporting entities. AIS serves as a primary source for verification of income and financial transactions during assessment proceedings. [incometax.gov.in]
Common Errors Found in AIS
- Duplicate reporting of transactions.
- Sale transactions reported without corresponding purchase details.
- Incorrect interest income.
- Mutual fund transactions belonging to another PAN holder.
- Property transactions incorrectly mapped.
- Securities transactions reported at gross values.
- Incorrect foreign remittance reporting.
- Incorrect SFT reporting by banks or financial institutions.
Action Points
Before filing the ITR:
√ Download AIS and TIS.
√ Compare AIS with:
- Form 26AS
- Bank statements
- Demat statements
- Mutual fund statements
- Property transaction records
√ Verify whether the income reported in AIS actually belongs to the assessee.
√ Submit feedback in AIS where information is:
- Incorrect
- Duplicated
- Relates to another person
- Already included elsewhere
- Not taxable
Importance of Providing AIS Feedback
If incorrect information is appearing in AIS and no feedback is submitted:
- The Department may consider the transaction while selecting cases for verification.
- Automated mismatch notices may be generated.
- The assessee may subsequently have to explain transactions during assessment proceedings.
Practical Example
Suppose AIS reflects:
- Interest income of ₹1,20,000 whereas actual bank interest is ₹20,000; or
- Share sale of ₹50 lakh which actually belongs to a joint holder.
In such cases, feedback should be submitted in AIS before filing the return so that the department’s records also reflect the taxpayer’s explanation.
Best Practice
Do not blindly report AIS figures in the ITR.
AIS is an information statement and not a final tax computation document. The taxpayer should reconcile each entry and provide feedback wherever necessary before filing the return.
Discuss above points with your consultant in advance to avoid tax or avoid missing disclosure in current and future years. Better tax planning can avoid excess tax liability in future.
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