InvestorQ : What are some of the critical things to keep mind while I am filing my tax returns? I am an individual in the middle income group and have some small investments in equity and mutual funds?
Tisha Malhotra made post

What are some of the critical things to keep mind while I am filing my tax returns? I am an individual in the middle income group and have some small investments in equity and mutual funds?

Moii Chavate answered.
3 years ago

Filing tax returns is your obligation. Most of us normally start worrying about our taxes and investments only in the last quarter, but you got to do better than that. But, more about that later! The financial year ends on March 31st and you get nearly 4 months till July 31st to file your tax returns. Ideally, don’t wait till the last minute but try to finish your tax filing once all your documents, including Form 16 and Form 26AS are in place.

Important things to keep in mind when you are filing Income Tax Returns

· At the outset remember that the tax return filed by you is an important document for a number of uses. Here is why! You will need to submit copies of your IT returns whether you are buying a property, planning to get a visa to the US/UK/EU, getting a personal loan or even applying for a credit card and even if you want to trade in F&O.

· If you are unsure whether to file returns; remember that all individuals with annual income (not taxable income) of over Rs.2.50 lakhs needs to file IT returns. Filing of returns has nothing to do with whether TDS has been deducted or whether you are liable to pay zero tax. If your total income is above Rs.2.50 lakhs, it is mandatory for you to file income tax returns.

· Ensure that to submit your income proofs to the HR department of the company you are employed well in advance. In case you forget to submit the proofs, you can still claim the refund while filing your returns but that is cumbersome. Keep documentary proofs of investments handy and also keep copies ready when filing returns. Make a dossier appropriately.

· In the modern times, this is really important. Ensure that your PAN and Aadhar are mapped and linked and check the status on the income tax website online? The Supreme Court ruling is clear that all tax returns will have to quote Aadhar. This year, your tax returns are likely to be rejected if not mapped with the Aadhar database. The process is also not too complicated!

· There are two important documents for filing returns. Form 16 from your employer and Form 26AS, which you can download from the Income Tax website. Form 16 is a certificate from your employer but Form 26AS is based on TDS deposited with the government. That is the authentic document that the IT department considers.

· Disclose all sources of income in your IT returns, even if not taxable. Your dividends may be tax-free and your interest may be within the tax-free limit. But it is still essential to disclose these details in your IT returns. Even LTCG within the annual limit of Rs.1 lakh needs to be disclosed in the returns.

· There are additional requirements if you are earning more than Rs.50 lakhs. If your annual income is above Rs.50 lakhs, you need to furnish additional details of your investments and property holdings. Such submissions must be backed by original purchase documents as proof of valuation.

· Today, online filing of returns is mandatory for most tax payers. More importantly, your job does not end with filing and uploading the returns. The returns need to be e-verified. You can e-verify your tax return online by linking it to your registered bank account, with Aadhar e-authentication, digital signature or via physical post.

· There is an important aspect of capital gains and losses. Losses can be carried forward or set off only if you file the returns by July 31st, else you lose the benefit of loss set-off. If you have capital losses, returns must be filed even if income is below Rs.2.50 lakhs.

· Refunds are largely simplified today. Most refunds are directly credited to your bank account via RTGS. To avoid misuse, the government has almost done away with the physical cheque payment of refunds. Hence, ensure that your bank details are updated in the Income Tax records.

· What if you forgot to file returns by July 31st? If there are no tax dues then you can file returns by March 31st next year. Even in zero refund cases, minimum penalty is mandatory now. Also, loss carry forward is not entertained if returns are filed after July 31st. If you have tax outstanding then that will attract additional penalty.

Make it a point to prepare your returns meticulously and file your returns on time. After all, peace of mind is worth a lot.