Filing Income Tax Return :Points to note for Individual Taxpayers

Ashish M. Shaji

07 Oct, 2021

Those individuals who are not subject to the tax audit provisions under Income Tax Act, the ITR filing deadline for Financial Year 2020-21 (Assessment Year- 2021-22) is extended from 31^st July 2021 to 30th September 2021 due to the Covid-19. In this article, we will look at some points which should be noted by individual taxpayers before filing Income Tax Return.

Filing Income Tax Return: For Individual Taxpayers

Here is the list of aspects to be noted by individual taxpayers:

• Select accurate ITR form

Ensure that you choose the ITR form that is applicable to you as there are numerous ITR forms. Hence, based on the taxpayers residential status and the income earned from different sources, file accurate ITR form.  For instance- Form ITR-1 can be used by a resident individual with a total income of up to 50 lakh rupees from salary, one house property and income from different sources. This form can’t be used by someone who is a non-resident or not an ordinary resident or has capital gains.

• New tax regime vs Old tax regime

With the introduction of the Finance Act, 2020 also came optional tax regime with modified tax slabs and rates. Hence taxpayers have the option to choose from the old and new tax regime when filing Income Tax Return. In case of salaried taxpayers, they may also select the tax regime which they had declared to their employer.

• Pre-filled ITR form

ITR forms shall import pre-filled information like personal information of the taxpayer and details of salary income, dividend income and capital gains available in Form 26 AS. It will help save some time of the taxpayers while filing as most of the information will be already pre-filled. Hence, individuals must first verify the information therein and then make necessary additions of the income. It is worth mentioning here that in case where the information therein is not correct, then the taxpayer must contact bank/payer of the income etc., in order to correct the data in their quarterly TDS return and would help in reflecting accurate information in Form 26 AS.

• Balance Taxes Payment

When the total taxable income is deduced, post including income under all heads and claiming deductions under Chapter VI-A of the Act, applicable tax rates have to be applied to calculate the total tax liability. Taxes due on the tax return after claiming credit of prepaid taxes have to be paid prior to filing the return. Please be aware that if such self assessment tax is over 1 lakh rupees, then it has to be paid prior to 31^st July 2021. It will help you to avoid additional interest liability.

• Verifying prepaid taxes

Taxpayers must verify pre-paid taxes, including tax deducted at source, advance tax and self assessment tax with Form 26 AS. In case of discrepancy, it should be told either to the employer or other payers or banks, as the case may be, for rectification which will allow quick processing of the return.

• Disclosure requirements

These disclosures should be made:

1. Details of bank accounts;
2. Details of unlisted equity shares;
3. Details of directorship in Indian/foreign companies;
4. Details of specified assets such as land, moveable assets etc., financial assets such as bank deposits, shares and securities etc., and corresponding liabilities should be disclosed if the total income of the individual taxpayer is more than 50 lakh rupees;
5. Ordinarily, resident individuals should furnish details of their assets outside India.

• Reporting exempt income

Taxpayers must report exempt income under Schedule EI like agricultural income, income not chargeable to tax according to double taxation avoidance agreement etc.

• Change of employment during the year

If the taxpayer furnishes requisite salary, details of the income earned from previous employer to the current employer, a Form 16 and Form 12BA^[1] may be issued by the present employer based on which ITR can be filed. Else, it can cause shortfall in TDS due to duplication of slab benefit, deductions, exemptions provided by employers.

• Filing Income Tax Return mandatorily

Finance Act mandated filing of ITR for select individuals who fulfil certain specified criteria during the relevant Financial Year even if such person doesn’t have a taxable income. They will have to furnish the same in case of:

1. Electricity bills payment of over 1 lakh rupees;
2. Deposit of over 1 crore rupees in aggregate in 1 or more current bank accounts;
3. Spending more than 2 lakh rupees in foreign travel.

• Non-filing of ITR

Taxpayers should be aware of the consequences of non-filing of ITR by the due date. Non-filing could be a result of non-availability of required documents, lack of time etc. If deadline of ITR filing is not met, it can lead to consequences such as levy of late fee, payment of interest on balance tax liability etc.

What to do in case of technical glitch on the income tax portal while filing Income Tax Return?

As you would be aware of the fact that the new income tax portal was affected by technical glitches recently, and you may go through our article to find out the exact issue. So if you face any glitch, then you should wait for a day and try again. Due to the magnitude of work on the portal, some functions may get disabled temporarily and if you face the issue again, then raise a grievance on the income tax portal. Your grievance will be addressed in a speedy manner.

Conclusion

As a taxpayer, you should assess your taxable income according to the provisions of the Act and verify documents/information while calculating final tax payable/refundable. Do take note of the above mentioned aspects before moving forward with filing income tax return. Pay within the due date to avoid paying penalties.

Read our article:Essentials points to note if you are filing ITR this Year