Tax compliance one must do before filing ITR

Posted by Reena More on July 19th, 2019

Every year, the period from July to September is the income tax return filing season. A taxpayer files his income tax return depending on prescribed due dates. He takes help from experts such as a financial advisor or chartered accountant to file his tax returns and reduce the tax burden. Filing tax returns has its advantages and one can easily benefit from it. Also, the process of filing tax returns has become a lot easier and hassle-free. However, a taxpayer should collect some documents and information before proceeding to file income tax returns.

The following points regarding tax compliance shall be helpful for a person to file income tax returns:

Informative details

  • Before filing any tax return, a person shall register himself on the income tax website. User ID shall be the PAN of the individual and password shall be as decided by the person.
  • It is important for the person to have an E-mail ID and mobile number as the tax department communicates information through the registered contact details in their database.
  • It is also mandatory to link his Aadhaar Card and Income Tax Account. It helps in the verification of tax returns.
  • Income Tax returns filed with the tax department are scrutinized by the tax officials. If details provided by the taxpayer are found to be incorrect or missing, then the tax authorities have the power to call for such documents and other information as required. Hence, it is necessary to provide accurate and complete information in tax returns for which one needs to be prepared in advance.
  • The tax, as paid by a person, is credited to the account of Government. It is a source of revenue for the government. It helps the government for incurring public expenditures and development of the country. So, one must pay taxes.
  • Only those deductions which are paid up to 31st  March can be claimed. For E.g. If the due date of filing income tax return is 31st  July 2019, then payments made up to 31st  March 2019 can be claimed as deductions.

Proof of investments and exemptions claimed

  • A person shall keep all proofs of investments made by him. Such investments should help in reducing tax liability. These investments shall be in the form of life insurance policies, new pension scheme, tax saving deposits, etc. These deductions shall be claimed under Section 80C of the Income tax act, 1961. However, it is to be noted that the maximum amount of deduction a person can claim under 80C is Rs. 1,50,000.
  • Expenses such as repayment of principal of housing loan, stamp duty charges, interest on education loan paid up to 31st  March are allowed as a deduction against one’s income. It helps to reduce tax liability and hence, one should keep proof of all such documents.
  • Where one still has to reduce his income, a donation made to trusts and other relief organizations can also be claimed as a deduction. It helps to lessen the tax payable. However, a donation receipt should be kept handy. The amount of donation shall be claimed as deduction under Section 80G.

Submission of the above documents to the employer and generation of Form 16

  • The employee shall give proof (documents as duly kept) of all the above deductions to be claimed to the employer and he shall then calculate tax liability and generate Form 16.
  • A taxpayer shall collect Form 16 from his employer. Form 16, in simpler words, is a statement received from the employer which provides details such as tax deducted at source, salary paid, allowances and exemptions claimed, deductions claimed, etc.

Request for 26AS

  • A taxpayer should collect Form 26AS from the website of the Income Tax Department i.e. Traces this certificate details outs the information about bankers and other organizations who have deducted tax at source from amount paid to him. This shall help him take credit of the taxes deducted in his name and also check for income as reflected in Form 26AS.

Payment of Tax

  • A person should keep his tax paid challans ready to file tax returns as details regarding date of payment of tax, BSR code, the amount paid, PAN is to be submitted in the tax returns. The tax paid is advance tax paid. It is payable when tax liability in a financial year increases to more than INR 10,000. Advance tax payments are to be made by 15th June, September, December, and March of the financial year. The dates as mentioned should be complied as any shortfall in the amount of advance tax increases your tax liability. Payment of tax before the last day of March shall also be treated as advance tax.
  • It is also important to take note that any shortfall in total tax liability shall be paid through self-assessment tax. However, it is not mandatory now to pay tax before filing income tax returns. One can upload a tax return with a tax liability and such return shall not be treated as defective return.

  Documenting various other income

  • Documentation regarding income from sources such as lottery, horse races, bank interest, non-compete fees, rent, interest on loans provided, the dividend shall be helpful while filing tax returns. Income, as stated above, shall be taxed in the hands of the taxpayer.
  • If a minor is earning income, then his income shall also be taxed in the hands of his parents. This is subject to some terms and conditions. Hence, a parent should note the income earned by his minor children and include the same in his tax returns. A deduction of Rs. 1,500 per child against income earned by minor is allowed to the parent in whose hands the income is clubbed.
  • A person who receives a pension shall also be liable to pay tax on it, even if the person does not provide service to his employer anymore.  Various exemptions and deductions can be claimed to reduce the tax burden on such income earned in retirement. Hence, a person shall note the amount of pension received before filing his tax returns.
  • Another taxable income is capital gains. Capital gain tax is levied on the sale of capital assets such as jewelry, house, building, shares, etc. Exemptions under Section 54 are useful in this case.  

Tax slabs

  • A person before making any tax compliance should know his tax slab and the tax rates applicable to him. It helps in calculating accurate tax figures and to do his tax planning accordingly.

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Reena More

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Reena More
Joined: April 9th, 2018
Articles Posted: 13

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