The countdown for filing income tax returns for the financial year 2022-23 (Assessment Year 2023-24) has begun. You have to file your return by July 31 or else you will have to pay a late filing penalty of Rs 5,000. Let us tell you what to do and what not to do while filing returns
The countdown for filing income tax returns for the financial year 2022-23 (Assessment Year 2023-24) has begun. You have to file your return by July 31 or face a late filing penalty of Rs 5,000. Come, we tell you the do’s and what not to do while filing returns:
Do not claim fake exemption for tax refund
This year, the income tax has a special focus on the salaried class as well. Notices have been sent to several people on the claimed deductions and documentary evidence has been sought from them. Moneycontrol has also pointed out earlier that some taxpayers claim deductions which are not mentioned in their Form 16.
Since no documentary proof is sought while filing IT returns, some people misuse the exemption in tax refund. However, in such a situation, a notice can be received from the Income Tax Department. Recently this has also been seen. Hence, the best option is to be honest while filing returns.
It is necessary to be careful when there are many sources of income
Nagachandra Reddy, Hyderabad-based chartered accountant and founder of Somu & Associates, says, “Many taxpayers follow reels and videos on social media platforms explaining how to file returns. By doing this, they make a mistake in filing the return and they have to pay more tax. If you deal in shares and cryptocurrencies or have sold mutual fund units, you need to be careful about returns. If you do not give the details of these things, then you may get a notice from the tax department and may also have to pay the penalty. If you find this process complicated, don’t forget to seek the help of a tax professional.
Give correct information of interest income, capital gains
Form 16 is an important document for salaried employees to file returns. However, many incomes do not appear in Form-16. For example, it may be that the interest received on the savings account is not reflected in it. Annual interest up to Rs 10,000 on savings account is tax free.
It may also happen that capital gains arising from sale of shares or mutual fund units may also not be reflected in Form 16. Consequently, you may get a notice from the Income Tax Department for not reporting such income. However, the Annual Information Statement (AIS) now contains all the income information. Chetan Chandak, director of tax consultancy portal TaxBirbal, says, “Providing wrong information about income after the Annual Information System comes into vogue can be costly.”
Choose the right ITR form
The source of your income will decide which ITR form you should use. If you are employed and also have income from capital gains, then you will have to use ITR-2 to file the return. If you are employed, your income is more than 50 lakhs and your income includes rental income, unlisted shares, foreign income and assets and crypto transactions, then also you have to fill ITR-2.
ITR-1 form is for those who have a house other than salary, income from interest and agricultural income is less than Rs 5,000. Also, the total income should be less than 50 lakhs. You may get a notice to file the return again if you use the wrong IT form and your return may be declared invalid if you don’t respond in time.
Don’t forget the verification process
If you think that after submitting the return its processing is over, then this information is not correct. To complete this process, you have to verify the return within 30 days of filing it. You can do this through the Income Department portal using Aadhaar number, bank account, demat account etc.
It is also necessary to follow the time limit in verification. If you verify your return after 30 days of filing it online, then the date of verification will be treated as the date of filing the return. In such a situation, if you verify the return on July 31, then you may also be fined in case of late filing of return.
