Arjuna (Fictional Character): Krishna, it’s pleasant weather all around with the monsoon having just begun. With this, the Income Tax Season has also resumed. How do you think taxpayers should prepare for both?
Krishna (Fictional Character): Arjuna, Income Tax Season can be tricky if due care is not taken. Income Tax Forms are now available for filing returns before the due date of 31st July 2024. One should be prompt in tax compliance and shall take proactive steps to ensure his Income Tax return is filed not only within the due date but also all particulars have been duly considered in his return.
Arjuna (Fictional Character): Krishna, What precautions should one take while filing ITR?
Krishna (Fictional Character): Arjuna, Just like it is necessary to take precautions in the Rainy Season, one should follow these 10 precautions while filing ITR:
1. Check Your 26AS/AIS: Just as you check the weather forecast before heading out to see if it will rain, every taxpayer should download and verify all details in Form 26AS and AIS to ensure that all TDS deductions have been correctly reported by the deductors.
2. Keep all documents Handy: Just as you go out in the rainy season prepared with a raincoat and umbrella, you should keep all essential and required documents, such as Form 16/16A, Capital Gain Statements, Sale Deeds for the year, and all relevant documents handy while filing your ITR
3. Correct ITR Form: Just as you won’t carry a hat but a raincoat for protecting yourself from rain, you should be careful while choosing correct ITR Form.
4. Report all sources of Income: Income from all sources, such as salary income, rental income from house property, profit from business and profession, capital gains from selling of a asset and other sources such as dividend or even a saving bank interest shall be reported in your ITR as everything forms part of your total income.
5. Carry forwarding Tax Credit: If TDS is reported in your Form 26AS but the income has not yet accrued, you may carry forward this credit to the next financial year when the income accrues, ensuring your TDS and the corresponding income are reconciled.
6. New Scheme/Old Scheme: Just as you carefully decide between a raincoat and an umbrella depending on your destination and convenience, you should evaluate which tax regime to opt for based on your income and deductions. Also, to opt for the old regime, the taxpayer must file Form 10IEA within the due date.
7. Capital Gains & Losses: People often neglect to report capital losses from trading or investments in their returns, which is incorrect. You can carry forward your capital losses to the next year where they can be set off against capital gains, thus reducing your tax liability. Similarly, some people forget to report capital gains income, leading to discrepancies in the return. Therefore, ensure you report your capital gains and losses.
8. Verifying ITR: Filing Return but not verifying within time is like carrying a broker umbrella, in other words it will be deemed useless. Returns shall be verified within 30 days of filing of ITR.
9. Clubbing Minor’s Income: Just as children’s sometimes creates nuisances in monsoons by playing in rain and getting sick, similarly if minor’s income is not clubbed and reported by their parents it may attract trouble for parents.
10. Due Date for Filing ITR: Just as it’s advised not to wait for the drizzle to stop because it might rain heavily again, similarly, you shouldn’t wait until the last moment to file your ITR and should file it as early as possible.
Arjuna (Fictional Character): Krishna, What should one learn from this?
Krishna (Fictional Character): Arjuna, Monsoon brings joys to all faces but you also have to be equally careful otherwise you may get sick. In the same way one should take the above precautions and be ready for the upcoming Income Tax Season.
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