Income Tax return filing essentials

The due date for filing of income tax returns for AY 2022 – 2023 for individuals (non – tax audit) taxpayers is 31st July 2022. The Income Tax Department has issued various forms & utilities to enable the filing of the tax returns. With a view to increase the tax base, ensure that large number of people file their returns & pay taxes on their income as well as to ensure accuracy & correctness of the income tax return being filed, the Income Tax Department is becoming increasingly cautious & bringing about various reforms & increased compliances. 

In this article, highlighted are certain aspects which taxpayers need to be aware of at the time of filing their tax returns so that compliance is accurate & to prevent any notices from the Income Tax Department.

It is advisable to have the following documents in place before filing of Income Tax returns: 

Form 16

Form 16 is a document which contains information in connection with the employees salary, perquisites, deductions claimed & TDS withheld on salary earned by the employee during the year.  The employer is required to mandatorily issue to the employee Form 16 on or before the 15th June of the following year. 

Form 16B

Incase during the year, the taxpayer has sold an immovable property the value of which exceeds INR 50 lakhs, the buyer is required to deduct TDS & issue to the seller of the property Form 16B  to the seller within 15 days of the due date of furnishing Form 26QB. 

Tax Saving Instruments

The Income Tax Act 1961 enables a taxpayer to claim deduction under Chapter VIA  which helps to reduce the total tax liability. Taxpayers at the time of filing the tax returns need to keep the proof of investment & expenditure made. Salaried employees are required to furnish the proof of investment to their employers in order to enable them deduct tax accurately incase the employee decides to opt for taxation under the old regime. 

Disclosure of Assets & Liabilities

Taxpayers whose total taxable income exceeds INR 50 lakhs, are required to give details of assets held & corresponding liabilities in Schedule AL. Assets to be reported include land, building (immovable assets), financial assets i.e bank deposits, shares securities, insurance policies, cash in hand, jewelry, bullion, vehicles, yachts, boats, aircrafts etc. These asstes are required to be reported at cost price or incase any improvements are incurred on such asset, the cost of improvement so incurred. 

For a non – resident or not ordinarily resident, details of assets located in India are required to be mentioned. 

Overseas Assets & Liabilities

When a resident taxpayer is in possession of any asset held overseas, such assets are mandatorily required to be disclosed in the Income Tax Return in Schedule FA.  Details of foreign bank accounts, financial interest in an entity, details of immovable property & other assets located outside India are required to be filled in. 

When the taxpayer is a legal owner as well as a beneficial owner of any asset located overseas, such asset is required to be disclosed in the ITR. 

Schedule FA is required to filled in only by a person ordinarily resident in India. Non – Residents & not ordinarily residents are not required to update details of their foreign assets while filing of their tax returns. 

Form 26AS

Form 26AS contains income earned by the taxpayer & taxed deducted thereon, advance tax paid & details of self assessment tax paid. Additionally, incase during the year, the taxpayer has received any refund & interest thereon, details of the same are disclosed in the 26AS. 

Form 26AS also contains details of income on which no TDS has been deducted i.e in respect of which Form 15G or Form 15H is submitted. 

If during the year, an immovable asset has been sold & the buyer of the property has deducted the TDS on sale proceeds, details of income from such sale & TDS on the same are also reflected. 

It is advisable for a taxpayer to ensure all the income & TDS which is reflected in the 26AS is correctly reported in the income tax return. 

Annual Information Statement (AIS)

An AIS is a comprehensive statement containing details of all financial transactions undertaken by a taxpayer during the financial year. Such a statement contains information related to income earned from various sources such as salary, dividend, interest earned on savings accounts, sale/purchase of equity shares etc. 
Taxpayers need to consider the details disclosed in the AIS & ensure that these are accurately disclosed in the ITR. 

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