ITR Filing Tips for
FY 2020-21 (AY 2021-2022): The deadline to file the income tax return for
salaried or small business individuals has been further extended to 31st
ITR Filing Tips for FY 2020-21 (AY
2021-2022): The deadline to file the income tax return for salaried or small business individuals has been further extended to 31st December 2021. After registration on the e-filing portal, the
taxpayers must do preparatory work before filing the income tax return. Here is a guide on how to prepare for filing your income tax return.
Find out which ITR form is applicable
First of all, evaluate your income sources to find out which ITR Form is
applicable. Selecting the proper ITR Forms is essential for the taxpayers. The
taxpayer has to choose the form based on the type of income source and
government has specified seven ITR forms for FY 2020-21. ITR forms ITR-1,
ITR-2, ITR-3 and ITR-4 are applicable for individuals. If the ITR forms are not
selected correctly, you may need to file ITR again on the notice from the
income tax department. Various online ITR filing platforms automatically detect
which ITR is suitable for you and it best to rely on them.
Collect and collate documents related to various income sources
The Income Tax Act categorises income sources into five heads: salary,
house property, business and profession, capital gains, and other sources. To
know all your sources of income, you should collect and collate data to
consolidate all the sources of income. For instance, you can collect a bank
account statement, interest certificates, capital gains reports from the
broker, Form 26AS and Form 16/16A.
Form 16 is a TDS certificate issued by the employer to the employee
every year. It contains a summary of the salary paid to the employee and TDS
deducted from it. Similarly, Form 16A is issued by the deductors for TDS
deducted on non-salary income. For example, TDS deducted on interest income,
rent receipts, professional receipts, etc.
The taxpayers can see the consolidated view of TDS deducted by all the
deductors in Form 26AS. The taxpayers can download Form 26AS from the income
Avoid mistakes while reporting income or deductions in ITR
After collecting all the information, broadly summarise your financial
information, such as professional receipts received, rent received, dividend,
capital gain/loss, salary, savings interest, etc. Similarly, you can collect
all the information about investments made during the year for tax saving
purposes. With this practice, you can avoid underreporting of income and
underclaiming of the deductions.
Carefully verify Form 26AS
The income tax department considers information as per Form 26AS. Along
with details of TDS deducted by the deductor, income credited or paid are also
mentioned in Form 26AS. You can find all the income details in Form 26AS for
the relevant financial year on which TDS is deducted. For example, income from
salary, interest from deposits in banks, dividend income, the value of the
immovable property sold during the year, etc. For the taxpayers having business
income and who file GST returns, the turnover declared in the GSTR-3B return is
displayed in Form 26AS. Apart from the income on which TDS is deducted, Form
26AS also shows high-value transactions entered by you during the year.
Hence, the taxpayer should prudently include all the incomes in the
income tax return. Also, verify the income details and the TDS amount in Form
26AS. If there is any mismatch in Form 16/16A and Form 26AS and you declare
income below the income mentioned in Form 26AS in the income tax return, the
income tax department may issue a notice for non-disclosure of income. One
should also verify whether the entries in Form 26AS belong to them. Hence, it
becomes imperative to reconcile your income as per Form 16/16A and Form 26AS.
At the time of filing your return there is an option of pre-filing
certain incomes such as salary, dividends, capital gains, and other data from
Form 26AS. However, one must verify the information and add data not captured
in the income tax return.
Compute income tax liability as per the
new or old tax regime
From FY 2020-21 onwards, the individuals and HUF can choose between the
new and old tax regimes. The new tax regime offers concessional tax rates.
Whereas in the existing tax regime, the taxpayer can benefit from various
exemptions and deductions. Individuals opting for a new tax regime for the FY
2020-21 should not forget to file Form 10IE. Form 10IE is a declaration to be
filed by the taxpayer to opt in or opt out of the new tax regime. The taxpayers
can submit the said form electronically through the income tax e-filing portal.
It has to be furnished before filing the income tax return of the relevant
Determine the income tax liability based on the tax regime (old or new)
that is beneficial to you.
Pay income tax dues before filing the
income tax return
After computing the income tax liability, the taxpayer should deduct
prepaid taxes from the total income tax liability to calculate the net tax
liability. One should pay the income tax dues before filing the income tax
return. It is important to note that if the self-assessment tax liability is
more than Rs 1 lakh for FY 2020-21, the due date to pay tax was 31st July 2021,
even if the return filing due date is extended to 31st December 2021. Hence,
any taxpayer who does not pay self assessment tax (where liability more than Rs
1 lakh) before 31st July 2021, has to pay interest at 1% per month or part of
the month calculated from the next day of 31st July 2021 to the actual date of
payment of tax.
This is all required to file the income tax return. Once you have done
with all the above basic requirements, you just need to report all the
information in the income tax return and submit it to the income tax