The last date for filing tax returns is normally July 31. But, 2020 was hardly a normal year! Hence the last date for filing returns was repeatedly postponed and has now been fixed at 31 December 2020. Hopefully, it will not be postponed further but it is best to assume this is the last date and be prepared. As an assessee filing tax returns for FY2019-20, what are the preparatory steps before filing your tax returns? Here is a quick dekko.
Missing the tax deadline is not a good idea
Assessees normally ask whether they can still file returns if the deadline is missed. While you can still file returns till the end of the current fiscal year i.e. March 2021, it is not a good idea. In the past, delays in filing returns were condoned but now there is a mandatory penalty of Rs10,000. This is irrespective of whether you have tax dues. Of course, if you have dues then the penalty and interest also get added. Additionally, it is a negative mark against your name; so best avoided.
To file or not to file?
Remember, it is not material whether you have tax payable or not. If your total income is more than Rs2.50 lakhs per year, you must mandatorily file returns. Also, there are other conditions like having capital gains or foreign income; in such cases it is mandatory to file returns even if your income is below Rs2.50 lakhs.
Use the correct form to file returns
Not everyone can use the same form. There are different forms if you have only salary and interest income; different forms if you have capital gains/losses and a different one if you are a director in any limited company. If you don’t use the correct form, your filing of returns will get rejected. The income tax website explains these things in elaborate detail. Also, don’t wait till 31 December. If all your key documents like Form 16, Form 26AS, capital gains statement are ready, you can file today itself. Last minute rush can lead to unnecessary penalties.
Right information in the right box
This may sound mundane but most people make mistakes here. ITR forms get rejected for simple reasons like wrong PAN/TAN quoted, TDS details filled in the wrong column, wrong assessment year selected etc. That is why it is useful to apply the maker / checker principle. Ask another person to check all the details as you could miss out your own mistakes.
Mention the correct assessment year
This problem can be addressed if you file the returns online as most of your data comes populated. However, when you file returns manually remember that the year to which the income relates is the Financial/Previous Year and next year is the Assessment Year. Now you will be filing returns for income of 2019-20, which will be your Previous Year. The assessment year for the same will be 2020-21.
Even tax-free incomes must be mentioned in returns
Today, the income tax department can track all your income flows and transactions through your PAN. Even if the dividend amount or interest amount is very small, make it a point to mention it in your returns to avoid any objection by the tax department. Also, if you have received any other income like fees or rent or profit from any sale of asset, you must disclose that too. It does not matter whether the income is taxable or not.
Never make false deduction claims
Remember, this is a punishable offence, however small the amount might be. Don’t claim Section 80C or Section 80D benefits you are not entitled to and don’t produce fake certificates. Avoid showing dummy losses in your returns to reduce tax on capital gains. The tax department takes a very serious view of such offences and the repercussions can be quite serious. Every claim you make must be legitimate and you should have documentary proof to back it up.
Don’t underestimate the power of Form 26AS
Form 26AS and Form 16 can be downloaded from the registered section of the Income Tax website. Form 26AS is the authentic record as per the Income Tax Department and your tax return must exactly align with the details shown in Form 26AS. That is why it is always better to download the Form 26AS well in advance and make rectifications where required so there are no last minute surprises.
Respond to any query from the Income Tax department
Often assessees take this quite lightly. When the IT department sends you a query for a clarification or more information, ensure to submit the requisite details immediately. This will ensure that future refunds are not held up.
This time around, there are some additional details you need to fill up when filing your returns. It should still not take you more than a couple of hours to complete the entire process. Be prepared to file on time and do your bit.