The income tax return-filing season has started and salaried tax-payers who have received their Forms-16 are preparing to file their return for financial year 2022-23 (assessment year 2023-24).
It is an annual ritual that most tax-payers detest, but an early start and meticulous approach can help minimise the hassles.
To understand how tax-payers can ensure smooth sailing despite the tediousness of the exercise, Moneycontrol spoke to Aarti Raote, Partner at Deloitte India.
Here are the key takeaways from the discussion:
Preparation ahead of commencing the process is key – it is always wise to start with gathering documents such as your Form-16, bank and capital gains statements, cryptocurrency transaction reports and so on.
You should also access Form 26 (tax credit statement that reflects TDS withheld by your employer or bank, for instance) and Annual Information Statement (AIS) prior to filing returns.
AIS is a comprehensive statement which displays your financial transactions – income earned from various sources and taxes withheld. The information is collated from multiple service providers – banks, mutual funds etc - so there could be errors.
AIS is a fairly new feature, so could contain errors until the process is completely streamlined. There could be duplication of the number of bank accounts or share transactions, for instance.
Some incomes may get missed while additional incomes could be displayed. Use AIS as a reference but not the sole source of information to file returns. At your end, go ahead and report income as per your records in your ITR.
You can go to the e-filing website to provide feedback on the discrepancies. Even if you do not, you will have the opportunity to do so if the tax department raises a query on the mismatch between AIS data and your return.
Poring over the documents will help you identify any passive income (interest on fixed deposits or bonds, dividend income, capital gains or losses on sale of shares or mutual funds, cryptocurrency transactions and so on) that you ought to disclose in your income tax return.
Choose the correct ITR form. For example, if your salary income is less than Rs 50 lakh, you own one house property and agriculture income is less than Rs 5,000, you can pick ITR-1. If you are a salaried tax-payer with a total income of over Rs 50 lakh or have capital gains/losses to report, you must choose ITR-2.
Salaried tax-payers will have the option to choose a tax regime different from the one they picked while filing investment declarations to their employers.
If you opted for the new, minimal-exemptions tax regime earlier and want to switch to the older, with-exemptions regime, ensure that you have all the supporting documents. For example, proofs of having made section 80C tax-saver investments. Since you would not have submitted these documents to your employer, the tax department could ask queries.
Do not postpone the process to the last minute. The I-T department’s e-filing website witnesses heavy traffic closer to July 31, so it is best to complete your return-filing sooner. It will also help you avoid common mistakes.
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