Start preparing for your ITR filing well before the July 31 deadline to avoid last-minute glitches and late filing penalties.
It’s the tax-filing season again and taxpayers need to file their income tax returns for FY 2018-19 till 31 July 2019. As such, you’ll be well-advised to be prepared with all relevant documents that prove your income, investments, eligible deductions, etc. to ensure a smooth tax-filing process. Here are 5 important pointers that taxpayers must consider while filing their tax returns for this financial year.
1. Keep important documents ready
It’s important that you keep all the documents ready before filing your returns. You may require documents like Form-16 (if you are salaried), interest certificate from the bank and Form 26 AS to figure out the tax deposited against your PAN during the financial year. Plus, details of tax-saving investments also need to be kept handy. Details of health insurance premium payment, home loan statement, capital gains from the sale of a property, mutual fund, shares, etc., statements of all the bank accounts, salary slips, and any other document which is relevant for filing the income tax returns are also important.
Also, do keep all the documents safely after filing the ITR as proof in case there is a query from the I-T department in the future.
2. Beware of the penalties for missing the tax-filing deadline
The last date to file the ITR without penalty for FY 2018-19 is 31 July 2019. If you fall in the taxable bracket and don’t file your returns on or before this deadline, you’re liable to pay a maximum penalty of Rs. 1,000 if your income is up to Rs 5 lakh. If your income is above Rs 5 lakh, you need to pay a penalty of up to Rs. 5,000 (if ITR is filed between 1 August and 31 December 2019) and up to Rs. 10,000 (if ITR is filed between 1 January and 31 March 2020).
3. Know the benefits of filing ITR
Filing the ITR can help you to get a bank loan easily. Usually, banks ask for ITR proof before disbursing a loan. Similarly, filing the ITR becomes very important if you are looking to buy a home or a car on loan.
It’s important to file tax returns even if you fall below the taxable limit but tax has been deducted on income like interest on fixed deposits in order to claim the TDS refunds. Also, you may need to submit ITR proofs to get a visa to particular countries. ITR is also necessary if you are going to take a life cover of a high amount.
4. Get clarity on who should file ITR
As discussed in the point above, it’s necessary to file ITR if you want to claim a TDS refund. If you had incurred capital losses and want to set-off such losses with the capital gains that you may earn in the subsequent year, then filing the ITR is necessary to carry forward such losses. ITR filing is also mandatory for resident individuals who own an asset outside the country.
5. Claim eligible tax deductions
While filing the ITR, don’t forget to claim the deduction benefits that can help reduce your tax liability. If you had made tax-saving investments u/s 80 C, 80CCD or paid premiums u/s 80D for health insurance, don’t forget to claim its deduction as it can reduce your tax outgo to that extent. Other eligible tax deductions such as u/s 80TTA, 80E, Sec 24, etc. also must be included at the time of filing the ITR.
Remember, if you file your tax returns timely, you get the chance to revise it within the prescribed time limit. But if you file a delayed ITR, you don’t get the opportunity to revise it. So, start preparing for your ITR filing well in advance to avoid last-minute glitches and late filing penalties.
(The writer is CEO, Bankbazaar.com)