Must check before filing the return of income

The return filing season is on and for salaried employees the last date for filing the IT return is 31st July, 2016 (for returns pertaining to FY 2015-16). Timely filing of return is a good practice and has many advantages too. However, apart from timely filing it is very important to file correct and accurate information. In this article we shall discuss few important points to be kept in mind before filing the return of income.
Selecting the correct return form
6 different forms are notified by Government for an individual tax payer viz. ITR 1, ITR 2, ITR 2A, ITR 3, ITR 4 and ITR 4S. A taxpayer not having income from business/profession has to select only from 3 forms viz. ITR 1, ITR 2 and ITR 2A. Thus a salaried person not having business/profession income has to choose amongst ITR 1, ITR 2 and ITR 2A depending upon his/her income.
Providing correct and complete personal and other details
Apart from providing correct personal details it is very important to provide complete information which will cover items like email id, telephone/mobile number, aadhar number, passport number (not required if filing ITR 1) and details of all bank accounts (saving/current).
Providing correct income details
Details of all the incomes earned during the year should be declared. It should be ensured that incomes like interest on investments, interest on saving account, taxable gain on sale of shares/mutual funds, etc. are declared in the return. The common mistake observed is omission to declare interest on saving bank account, FDs, NSC, etc. If you have earned interest on saving bank account/post office saving account then don’t forget to declare the same in your return and on the same hand make sure that you claim deduction upto Rs. 10,000 under section 80TTA (first you have to declare entire saving interest as income and then claim deduction under section 80TTA of upto Rs. 10,000).
Declaring exempt income
It’s true that exempt income is tax free, but it does not implies that exempt income is not to be declared in the return of income. Non-taxable incomes like exempted allowances, dividends, gain on sale of listed share after holding for more than 1 year, etc. should also be declared in return of income. Return forms have a separate section for declaring the exempt income. It should be confirmed that non-taxable incomes are reported in the section of exempt income and are not added with taxable income.
Declaring clubbed income
At times income of spouse/minor child is clubbed along with the income of taxpayer, in such a case it should be ensured that the income so clubbed is included along with the income of the taxpayer and declared in the return. In case of taxpayers filing the return in forms other than ITR 1, the clubbed income is also to be declared separately in the details of “income of specified person”. For taxpayer filing the return in ITR 1, it is sufficient if they just add the respective income along with their income (as there is no separate section for clubbed income).
E.g. Mr. Raja has made a fixed deposit in the name of his minor daughter and interest for the year on this fixed deposit amounted to Rs. 84,000. In this case, considering Mr. Raja’s income more than his spouse’s income, the interest of Rs. 84,000 on FD in the name of minor daughter will be taxed in the hands of Mr. Raja and will be added along with his income. Exemption under section 10(32) is available upto Rs. 1,500 per minor and hence in this case net income of Rs. 82,500 will be clubbed (Rs. 1,500 will be reported in the section of exempt income). Rs. 82,500 will be taxed under the head income from other sources. If he is filing return in ITR 1 then he will add interest of Rs. 82,500 along with his income under the head other sources. If he is filing return in forms other than ITR 1 then he has to add interest of Rs. 82,500 along with his income and also needs to declare minor’s income so clubbed in the section of “Income of specified person” (referred as Schedule SPI in return form). In both the case he has to declare Rs. 1,500 under the details of exempt income.
Claiming all the deductions
A taxpayer is entitled for certain deductions from his income as specified under section 80C to 80U (few major items are payment of life insurance premium, investment in PF/PPF, NSC, repayment of home loan principal component, investment in tax saving pension plan, investment in NPS, payment of medical insurance, payment of interest on educational loan, specified donations, etc.). While filing the return of income, it should be ensured that all the deductions which are legally available to taxpayer are claimed in the return of income.
Confirming the tax credit with form 26AS
This is a very important step which should never be skipped before filing the return of income. Form 26AS reflects the tax credit in the account of taxpayer as per the database of Income-tax Department. This will reflect credit of taxes paid by the taxpayer in the form of TDS, TCS, advance tax and self-assessment tax. Form 26AS can be downloaded from the taxpayer’s e-filing account at www.incometaxindiaefiling.gov.in
If there is any mismatch between the tax credit reflected in form 26AS and tax credit as per the taxpayer’s actual data, then appropriate action should be taken to match the same. It is advised to file the return only after matching the tax credit as per form 26AS with the actual tax credit for which taxpayer is entitled.
Paying any due before filing the return
It should be confirmed that tax/interest payable (if any) as per the return of income should be paid before filing the return of income and the details of such payment should be mentioned in the return of income.
Bank account for refund
If refund is due on returned income, then ensure that you select the correct bank account in which you desire to get the refund. The refund of excess tax paid by you will be credited to the bank account opted by you for credit of refund, hence, select only that account in which you desire to get the refund credited.
Declaring details of assets and liabilities
If the taxable income exceeds Rs. 50,00,000 then the details of assets and liabilities are also to be provided in the return under the section referred as “Schedule AL”. The value to be reflected will be the cost and the items are immovable property i.e. land/building, movable property being cash on hand, jewellery, bullion, etc. and vehicles, yachts, boats and aircraft. Apart from value of above assets, any liability attached to these assets is also to be declared.
Details of foreign income
If you have earned income from outside India then ensure that the same is declared in your return of income being filed in India in the section referred as schedule FSI and if any tax relief is available for foreign income then provide the details of such relief in the section referred as schedule TR
Details of foreign assets
If you hold foreign asset then make sure that you provide the details of these assets in the section referred as schedule FA.

Timely filing of return is a good practice and has many advantages too. However, apart from timely filing it is very important to file correct and accurate information.

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