If you haven’t filed your income tax return, please hurry up. With a penalty of Rs 5,000 for missing July 31 deadline, everyone is in a hurry. It is important that you don’t pay undue tax to the government. At the same time, it is also necessary that you reveal all your income. So a tax payer should know what precautions to take while filing income tax return.
Precaution 1: Correct computation of total income
Compile all your salary statements, bonus, form 16, bank statements, rent receipts, mutual fund statements, income from other sources in one place. Then calculate your total taxable income. You should also fill your exempt income in the form.
You can tally it with form 26AS that can be downloaded from the tax department's website.
Challenge 2: Not knowing the available tax reliefs
There were many changes in the tax rules for last financial year. Keep track of them. For example, standard deduction of Rs 40,000 per annum was replaced with exemption of Rs 15,000 for medical reimbursements and transport allowance of Rs 1,600 per month for salaried individuals.
Then there are common deductions under section 80C of the Income Tax Act. You should know them. These include education loan (under section 80E), deduction of up to Rs 1.25 lakh for medical expenditure of severely disabled dependent (section 80DD), deduction of up to Rs 50,000 deduction medical insurance premium of senior citizen parents (under section 80D).
Precaution 3: Declare investment proof to employer on time
If employees submit tax-related proofs to their employer on time, it will be reflected in Form 16 and these deductions can be claimed at the time of filing of e-return.
If there is an excess TDS payout, it can be claimed back.
Precaution 4: Keep all your documents ready
Keep Form 16, Form 16A, Bank Statements, Form 12 B, Investment documents such as bank FDs, Mutual fund record and tax deduction documents ready. Ensure that you fill correct information from your documents.
Precaution 5: Claim appropriate exemptions on your investments
Have evidence of investments made to claim an exemption to the applicable extent. Exemptions related to Leave Travel Allowance, Medical Allowance etc can be filed at the time of filing of ITR, if not filed in Form 16 by the employer.