Filing Income Tax? Here are the Dos and Don’ts!

The last date for filing income tax returns is almost here i.e Dec 31st, 2020. So, it’s time to gear up and complete the annual tax filing before the date. This will help you to avoid paying fines and late charges. Also, you must take the necessary precautions and follow the correct steps during the entire procedure. However, despite the income tax filing process having been simplified, many people are still scared of filing their IT returns by themselves as they are scared of making mistakes. Some misconceptions such as- filing tax returns are not mandatory as tax is compulsorily deducted from their salaries. 

People who are filing ITR often find it too complicated and they take help from experts. There is a lack of financial knowledge as well as tax awareness among many. So, before you start filing your tax returns, it is necessary that you are aware of the essential dos and don’ts of tax filing so that they can avoid last-minute errors. Here are some of the do’s and don’ts which will help you file your tax returns yourself.

Do’s 

• Keep Your Documents Organized: The first and the most important thing you need to do while filing your income tax returns is to keep your documents ready. This includes all your old tax receipts, receipts of income and investments, Form 26AS, Form 16, etc. Keeping these documents handy when filing will save much of your time and will make the process simplified. Even after the filling is done you need to keep the documents safe as you might need them in case your return is called out for scrutiny later.
• Know which tax slab you fall under: The income tax slab you fall under depends on your income. So, you need to know which tax slab do you fall in.

  As per the New Income Tax Slab 

• Up to ₹2.5 lakh – Nil
• ₹ 2,50,001 to ₹ 5,00,000 – 5%
• ₹ 5,00,001 to ₹ 7,50,001 – 10%
• ₹ 7,50,001 to ₹ 10,00,000 – 15%
• ₹ 10,00,001 to ₹ 12,50,000 – 20%
• ₹ 12,50,001 to ₹ 15,00,000 – 25%
• Above ₹15,00,000 – 30%

• Choose the Correct ITR Form: The taxpayer needs to choose the correct ITR form based on their sources of income. Such as every salaried individual who has a taxable income and for whom taxes have been deducted at source by the employer receive Form 16. Salaried individuals also having income from the property and any other sources making the total income of up to Rs 50 lakh can use ITR 1. 
• Don’t hide your income: Don’t hide the salary from your previous employer or any other additional source of income while filing your returns.

Keep your TDS records.

• The calculation is a Must: While filing your returns it’s important to calculate your tax liability and how many deductions you can claim on. For knowing the places where you can claim deductions you need to have the proper knowledge of tax saving investment portfolios and Income tax sections under which the deductions can be claimed. In case you have any home loan, education loan, or a personal loan used towards education or home renovation, then the interest paid towards are tax-deductible from your income. 

Having tax liability calculated will make it easy for you to file your Income Tax Return. You can take the help of online tax calculators to do it with accuracy.

Don’ts

• Any incorrect information can cause a major delay in your ITR being processed. Hence, avoid making any mistakes while filing ITR. Details such as name as per bank records, postal address, email ID, PAN number, AADHAAR number, Bank account number, and IFSC code have to be correct anyway.
•  Investments made in the same financial year should be compulsorily mentioned while filing your ITR. Claiming the deduction based on your investments is also a must to gain benefits.
• It is compulsory to calculate the tax liability and pay self-assessment tax/advance tax before the end of the Financial Year. 
• You may likely make mistakes while filing at the last minute. So, try not to delay! In the worst-case scenario, you may even end up paying more taxes or some penal interest than necessary by leaving it to the last minute. 

The dos and don’ts for TDS Returns are mandatory to follow before you go ahead with filing the tax returns. Filing income tax returns is complicated for a lot of people, but going through these tips will make the process hassle-free for you. 

Source: Finance Buddha