ITR filing: Seven points to bear in mind before filing income tax returns

It is mandatory to file an ITR if your income exceeds the basic exemption limit. For 2023-24 (assessment year 2024-25), the basic exemption limit is Rs 2.5 lakh for those below 60 years of age under the old tax regime and Rs 3 lakh under the new, minimal exemptions regime. Moreover, if you have spent more than Rs 2 lakh on foreign travel or have deposited Rs 1 crore or more in current accounts, you have to file returns even if your income does not exceed the basic exemption limit.

Also read: ITR filing 2023-24 | Not filing income tax return: Know the fines, penalties and other consequences

Which ITR form should I choose?

This will depend on your sources of income. If you are a salaried individual with a total income of less than Rs 50 lakh including your pay and interest, and agricultural income of up to Rs 5,000, and own only one house property—you can use ITR-1 (Sahaj).

But salaried employees with incomes of over Rs 50 lakh, capital gains, investment in cryptocurrencies, unlisted shares and so on will have to choose ITR-2. For those with business income, including income from trading on stock exchanges in cash or futures and options segments, ITR-3 is the applicable form.

Also read: Salaried taxpayer? Know how to pick the right ITR form, avoid common errors

What are the documents needed to file ITR?

This will depend on your source of income and the respective ITR form. If you are a salaried individual, you will need documents such as Form 16, bank statements, capital gains statements from your broker, online mutual fund intermediaries or fund houses, among others.

You must check both Form 26AS and Annual Information Statement (AIS)—the first lists all taxes deducted from various sources of income, and the second gives a more comprehensive picture of taxes and financial transactions—on the I-T e-filing portal to ensure that you do not miss out on reporting any income.

What are the ITR-related changes for 2023-24 that I need to be aware of?

This time around, the income tax department has sought additional details, particularly around deductions, through the new ITR forms released earlier this year.

You will have to share the details of donations made under Section 80GGC of the Income-tax Act to political parties. For instance, apart from the contribution amount, which can be claimed as 100 percent tax deduction, you will have to disclose the break-up in the form of mode of payment, specific transaction number linked to bank transfer and so on.

Likewise, tax-payers will have to provide their disabled dependants’ PAN and Aadhaar if they are availing of deductions under Section 80DD. The ITR forms also seek information on bonuses or maturity proceeds received under high-value life insurance policies (endowment policies with annual premiums of over Rs 5 lakh and unit-linked insurance plans with annual premiums of over Rs 2.5 lakh).

What are the common mistakes I should steer clear of?

To start with, ensure that you select the right ITR form. Using the wrong form will render your returns ‘defective’.

Do not miss out on reporting any income. The AIS captures all details. So, it’s best to be transparent. Ensure that you make the required disclosures in schedule VDA (virtual digital assets) and CG (capital gains) if you have dabbled in cryptocurrencies or made gains or losses on stocks or mutual funds.

Do not forget to disclose interest earned on savings and fixed deposits across all your bank accounts as also capital gains made through stocks, mutual funds, etc. Disclose foreign assets, including bank accounts overseas even if they have no deposits. If you own shares allotted to you by a multinational employer, you will have to use ITR-2 and disclose details under Schedule FA (foreign assets).

You can claim credit on taxes paid overseas if India has a double tax avoidance agreement with the country where you have earned the income. You should file Form 67 to claim the tax credit, as skipping this step or incorrect filing could trigger I-T notices.

Finally, enter the correct bank account details to ensure refunds are credited without delay.

Also read: Not disclosing foreign bank, pension accounts or other assets held abroad can trigger I-T notices | Simply Save

Why is it important to verify returns after submission?

Once you submit your return online, you will have to verify it through the e-filing portal, your net banking account, demat account or Aadhaar-OTP route within 30 days. You can also download ITR-V, the acknowledgement form, and send it to the income tax department’s central processing centre (CPC) in Bengaluru. If you don’t, your return will be considered invalid and, hence, will not be taken up for processing.

Can I file my ITR after July 31?

Yes, but the delay will burn a hole in your pocket. For FY24, you can file belated returns until December 31, 2024, but you will have to shell out a late-filing fee of Rs 5,000. However, this will be limited to Rs 1,000 if your total income is less than Rs 5 lakh.