The ITR filing season is on. Before you actually sit down to file your ITR, you should do some ground work so that the actual process of working out the numbers for your ITR and filing is smooth and seamless. Let us discuss what preparatory work you need to do in advance for this purpose.

For salaried

For those you are in receipt of salary, should first of all verify the details as mentioned in your form no. 16, which contains details of various taxable and exempt component of your salary. It also has details of various deductions available to you, based on the documents submitted by you to the employer. There is all possibility of some of exempt allowance having been treated as taxable in form 16,  in case you have failed to submit the supporting documents. For example if you have not submitted the rent receipts for your HRA (House Rent Allowance) claim or proof for travel to claim LTA (Leave travel Assistance) the same might have been treated as taxable and tax would have been deducted by your employer. Likewise, in you have failed to furnish details of various deductions available like home loan repayment, NSC, ELSS, PPF, School, NPS, health insurance etc. the employer would have obviously deducted higher tax than what would be your actual tax liability. This may happen either due to delay in submitting the proof or due to oversight of finance department of your Company. If you find that proper deductions have not been mentioned in form 16, though you cannot get it changed so soon but you can always claim these legitimate deductions while filing your ITR. So please bring such instances to your consultant’s notice so that he makes proper claim while filing the ITR.

Income Tax Return - Businessman team discuss project startup

Please also verify that the amount of gross salary is correctly shown in form no. 16 as per the salary monthly slips received or amount credited in your bank account after accounting for various deductions like PF, Profession tax and income tax etc. This will also help you verify various amounts deducted from your salary against which you can make claim while filing your ITR.

For are self employed

Based on the gross receipt of your business or profession during the year, you can ascertain in advance whether you are eligible to opt for presumptive taxation or not. In case your turnover has crossed the threshold, you may have to get your accounts audited from a Chartered Accountant and get the audit report uploaded to the tax department website. In case you have to get your accounts audited, you get longer time to file your ITR.

For those whose business receipts are subject to tax deduction at source, should verify the amount of tax credit reflected in form No. 26AS and reconcile it with your books of accounts. There may be some discrepancy due to year end transactions or different methods of accounting followed by you and your customer/client. This is very important as you will get the credit for TDS only on the basis of form no. 26AS and not as claimed by you. So in case you find any discrepancy, please seek clarification from the deductor. It may also happen due to omission of accounting of your invoices or non-payment of tax deducted by deducutor to the credit of the government.

For those investing in stock exchange or mutual funds

In case you invest in direct equity, you will have to get statement of account from your broker and statement from your depository for your demat account for shares sold and purchased during the year for computing the capital gains. You cannot only go by the bank statement as there may be some buy and sale transactions on the same day impact of which would not get fully reflected in your bank statement. For your investments in mutual funds, please get a detailed statement of the transactions done during the year for your dealing with various mutual funds. Some of these transactions like STP may not reflect in your bank account and thus may go unreported. you can also request for capital gains statement from the mutual fund house or their respective registrar for cross checking your working.

For interest income

For those who invest in fixed deposits with banks should obtain an interest certificate for the whole year to ensure that all the interest income gets fully included in your ITR. For those following accrual system of accounting for the interest income will have to show accrued interest in respect of cumulative deposits.  Even if you are following cash basis, you have to include the interest accumulated on deposits which have been renewed on maturity as these will not get reflected in your bank account.

Verification of transactions in form No. 26AS  and your bank statement

Each one of you should download latest form No. 26AS to verify and ensure that all the income including interest are included in your income as well as to ensure that full tax credit for TDS as per your books is available here. As form no 26 AS now includes financial transactions entered into by you during the year, verify that the transactions recorded in 26AS belong to you and the respective income has been considered while making your tax working. Please go through the bank statements for full year  to find out any item of income which is not regular and may escape your attention. The bank account may also reflect some items of investments/expenditure for which you are eligible to claim tax benefits as all Chartered Accountants do not scan your bank statement for filing of your ITR.

Hope this discussion is useful for you.

Balwant Jain is a tax and investment expert and can be reached on [email protected] and @jainbalwant on his tweeter handle.

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7 Comments

  1. Sekaran says:

    My tenant says he deposited the TDS on rent to HDFC bank in June 2019 for FY 2019-20. It is not showing up till date on 26AS. What shall I do.? He is blaming the Traces/CBDT for their lackadaisical approach in crediting. I am a senior citizen and am at a loss what to do with the case..
    Could you please advise me how I can get the credit for tax already deduced. You may advise me on my e mail…

  2. Bashir says:

    The ifsc of j & k bank like JAKA0…. show error while adding a new bank account. A month old grievance in this regard is unattended at the income tax portal.

    1. vswami says:

      See if the earlier reply posted wrt the post of CHANDRAKANT RONGHE refers to the same problem.

      Any way, he or the author of this write-up orthe ADMN., do not seem to have any UPDATE to share till now.

      Be that as it may, when just now tried, the DISPLAY that popped up is (:
      > https://eportal.incometax.gov.in/iec/foservices/#/login
      Portal is going through a maintenance. Inconvenience caused is regretted.>
      Same suspense story retold, as even before-That is, STATUS QUO; regrettably no indication so far as to when exactly the portal will be ALL CLEAR for all those who have or have not paid SA tax, if any due, by July 31, 2021.
      In all fairness, ITD is expected to, – rather should, make an announcement, forthwith, to the effect that so long as tax return (original or revised) is filed before the extended due date(S), no interest shall be levied under any of the provisions otherwise applicable !

      courtesy

  3. MAHENDRA GOENKA says:

    I AM HAVING INCOME FRON DIVIDEND FROM MUTUAL FUND AND SOME INTEREST INCOME FROM COMPANY FD. I DO NOT HAVE ANY BUSINESS INCOME THEREFORE I AM TO FILE ITR 2
    IN FY 2020-2021 ONE PERSON TO WHOM I HAVE GIVEN LOAN HAVE NOT REPAID THEREFORE I HAD TO FILE LEGAL SUIT ON HIM FOR RECOVERY AND HAD TO INCURR EXPENSES FOR COURT STAMP FEE AND ADVOCATE FEE.
    ARE THESE EXPENSES DEDUCTABLE FROM INTEREST INCOME RECEIVED FROM COMPANY FD / DIVIDENDS.
    KINDLY ADVICE

    1. Jasmeet Singh says:

      Yes Mr . Mahendra as per the provisions of Section 57(iii) which allows deduction of expenditure against income under the head other sources the following explanation might sort your issue

      “if the assessee has no option except to incur the expenditure in order to make the earning of the income possible, such as when he has to incur legal expenses for preserving and maintaining the source of income, then undoubtedly, such expenditure would be an allowable deduction.

      I hope it answers your query.

  4. vswami says:

    “……………………THE VALIDATION ERROR AS ” ENTER A VALID BANK NAME “
    It is possible that such an error arises because of a particular bank having been merged with a nodal bank, but the latter is not included in the banks’ list on the ITD portal. Am told this could be resaolved by other alternative options open to upload the ITR 1.

    Try ; if succeed, let me know whether you have been able to sumit with no other difficulty; also get the ACK., instantly on line – will you !
    courtesy

  5. CHANDRAKANT RONGHE says:

    A VERY INFORMATIVE ARTICLE. I AM HAVING ONE QUERRY. I AM TRYING TO UPLOAD ITR-1, BUT I AM CONSTANTLY GETTING THE VALIDATION ERROR AS ” ENTER A VALID BANK NAME “. IN FACT I HAVE ENTERED ALL THE BANK DETAILS METICULOUSLY, STILL IT DISPLAYS ” CANNOT BE VALIDATED” I AM AT A FIX AND CANNOT PROCEED FURTHER. I HAVE ALREADY RAISED A GRIEVANCE, BUT IN VAIN. 9422018123

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