Things you should know while filing ITR - Income Tax Filing Guide

 

Introduction

First, let us understand what ITR means?

The full form is an Income tax return, which is a form that a person is supposed to submit to the Tax Department of India.

It contains information about the person’s income and the taxes to be paid on it during the year. Information filed in ITR should pertain to a particular financial year.

The income tax department has classified 7 types of ITR - ITR-1,-2,-3 till -7 and the applicability of the form will depend on the future.

You can do it through the-website also, as we know the reason is due to the pandemic all over the world.

This article is the step-by-step guide of Income-tax filing and knowing about what exactly is ITR.

CA Services For tax as we have discussed earlier as to what responsibilities CA has to do in every firm. CA makes a firm or business more stable, as every small business will need an individual who does multitasking as a professional CA does.

CA ensures the strong depth of the firm. When the small business is in the early phases of growth, CA ensures that there will be consistent and he performs operations like analyzing the risk and audit reviews and ITR files 

People often think that an accountant is not important for any business. But they are unaware of the fact that an accountant only will set the accounts and will file the tax returns when businesses are set up.

So it is important to know that CA is capable of many things, he may set things right which may be difficult for us to do.

CA business services help us to understand the ITR process as we know there are many details so CA undergoes each step and assists us to get our ITR filled. So these services are very essential.

 

STEP - BY - STEP GUIDE

1)    Declaring income fully and accurately: One needs to declare all the incomes fully and accurately to avoid any mistakes which result in warrants income tax notices.

2)    Choosing the correct ITR form: It is one of the most important aspects to ensure ITR is filled carefully. One must understand the form elegance and fill it accordingly.

3)    Declaring the excused income: We often assume that we do not require to declare the exempt income. This is not true, according to the income tax department it is mandatory to report even various components of excused income.

4)    Declaring interest income: It is such an income, that mostly it is ignored and not paid attention to. It will be a safe practice to declare interest income to understand the taxability at the beginning stages.

5)    Claiming TDS: TDS is an effective tax paid by you in advance. So, it can help you to utilize the settlements of tax reliability or claim refund.

6)    Filing the ITR on time: It is pretty considered the most important step. There are some outcomes that you can face if you don’t file ITR on time:

-        Levy on penalty

-        Levy on interest

-        Carry forward losses.

 

7)    Making important disclosures: It includes

-        Reporting active bank accounts

-        Reporting directorship details

-        Disclosing assets beyond a certain limit.

8)    Verifying the Filed ITR: The final and most important step. It is observed that most times an individual does not verify the ITR and it results in him in undue occurrences. It is the same as not filing the ITR.

 

The above steps are some things you should know before why ITR filing is important and how careful we should be.

 

The Process

 

It is always recommended that you should always keep the TDS document with yourself as always mentioned the first step is to collect all the documents you need to file ITR such as form 16,  Salary slips, and interest certificates, etc. The document will help you to compute your own tax income which is in gross and will provide you with the details of tax deducted at the source.

 

Then the other step comes that is, compute the total income for the financial year.

Once you have collected all the documents that are required then they are deducted from your income, you are required to compute by adding incomes from different heads.

 

Compute the tax liability, after computing your total income you must always calculate the tax liability. The income tax slabs and rates have remained unchanged as compared to the previous years.

Always remember that you are required to pay tax on long-term capital gains from the equity mutual funds if the gains exceed Rs 1 lakh. The tax will be paid at 10% without any indexation benefit. Therefore, it is always important to check if one has any capital gains and collect the capital gains statements to gain the total amount.

VERIFICATION OF ITR

The last step of ITR is verification as we all know, that verification is important to keep governance and secrecy of documents in the department. There is a total of 8 steps for the verification in that 5 are electronic and 3 are physical presence. We will not go into detail but will have a small overview of it.

The verification process all depends on your access to documents. Documents like which proves your citizenship and assurance to the income tax department. Before 10 years, the verification was done through physical applications as they were no such electronic devices but because of electronic devices, the verification step has become easy and flexible.

CONCLUSION

If anyone asks, what if we don’t file ITR. The tax department can levy a penalty equal to 50 % of the tax which certainly would have been avoided by you. The most important thing is to select the ITR form as it depends upon the sources of the income of the taxpayer, the amount of income earned, and the category of tax that belongs to.

So I hope you would have understood the importance of filing the ITR.

This article just not provides details about ITR but also gives us immense information about the process behind the ITR.