Do’s and Don’ts of Income Tax Return Filing

DO’s before you file your Income Tax Return

Choose the correct Income Tax Form

This mistake is common among first time filers. Choosing the appropriate IT Return form is of primary importance to any taxpayer. In case a wrong IT Return form is filed, then defective return notice is issued by Income Tax department and the return is deemed to be not filed in some cases.

File your ITR using Tax2win’s DIY, an AI-powered portal that selects the correct ITR Form based on your income source. If you need assistance filing your Income Tax Return, you can hire Online CAs here.

Verify the ITR after E-filing

No submission of ITR-V: After filing of ITR, sending the signed copy of ITR-V by post within 30 days of e-filing is mandatory, and if one fails to verify it within 30 days, it will be considered invalid and as ‘not filed.’ Verification can be completed in one of two ways: either manually by sending a signed copy of the ITR-V acknowledgment, using blue ink, to the Income Tax Department CPC in Bangalore or online.

Report all your Incomes

Not reporting of bank's interest income: It is mandatory to report the interest income received from savings or fixed deposit accounts. The bank deducts TDS (Tax Deducted at Source) at the rate of 10% when the assessee earns interest of more than Rs. 10,000. Hence, it becomes imperative that you declare the income from interest in order to avoid notices from the IT Department.

Not reporting exempt income: Many people make the mistake of not reporting income exempt from taxes. It is now mandatory to declare income exempt from Income Tax too, such as PPF Interest, dividends and Long Term Capital Gains from listed securities in your tax return.

Check your residential status

• Your residential status for tax purposes significantly impacts what you owe. This is especially true if you have income or assets from outside India.
• Be sure to determine your residential status each year and report it accurately on your tax return.

Pay all taxes on time

Failing to pay Advance Tax/Self-Assessment Tax: It is mandatory for individual taxpayers to estimate their tax liability and pay advance tax/self-assessment tax before the end of the Financial Year in order to avoid a penalty of 1% per month starting from the end of the relevant quarter. This is required only if your tax liability exceeds Rs. 10,000/- in the Financial Year.

Get Organized

Filing your tax return can be stressful, but staying organized throughout the year can make the process much smoother. Here are some key steps to get organized for filing your tax return:

• Gather important documents: Throughout the year, collect all the documents you'll need to file your return. This includes income statements like W-2s and 1099s, receipts for potential deductions, and any other tax-related forms you receive.
• Consider going digital: Scanning your paper documents and saving them securely as PDFs can save space and make them easier to find later. There are also digital tools and apps designed specifically for expense tracking and tax record-keeping.
• Create a filing system: Whether physical or digital, have a clear system for organizing your documents. Categorize them by year and type (income, deductions, etc.) This will make it much easier to find what you need come tax time.
• Start early: Don't wait until the last minute to collect your documents and file your return. The earlier you start, the less likely you are to feel overwhelmed or miss any important deadlines.

Keep the following documents handy before filing ITR:

• Pay slips
• CTC Breakup (To claim eligibility under various tax-free income components like HRA, LTA, etc.)
• TDS Certificates from the Bank
• Tax Saving Investment Proofs (To avail deduction under various sections)
• Home and Education Loan & Certificates (if any, in order to avail deductions under Sections 80, 80E, and 24)
• Bank Statements (required for interest income, gifts received in the relevant Financial Year, and dividend income, if any)
• HRA Receipts, LTA Expenses, and Reimbursement slips

Decide how to file

You can file using the Income Tax Department's public portal online, you can also use Tax2win’s AI powered DIY filing or get our Tax Experts to file it for you.

File-it-yourself( helps in bypassing all complexity for the first timer with our simplest software):

Get CA Assistance (Our expert CAs assist you by filing the return for you in the most convenient, hassle-free manner)

Keep track of TDS

As we discussed in our earlier blog posts, TDS helps the government in obtaining a steady source of income throughout the year. Your employer deducts TDS from your salary on the basis of information available to him. Hence, it is very important to submit your investment proofs, rent receipts, etc in order to avail the benefit of deductions. The Form 16 that you receive has details of all Tax deducted at source and your taxable income after allowances and Section 80C deductions.

If you are a self-employed person and have a tax liability of more than Rs. 10,000/-, you need to pay Advance Tax to the government every quarter.

The deadlines for this purpose are as below:

For calculation of Advance Tax:
Add all payments received and expected till March 31st to get an estimate of your taxable income.

Deduct expenses directly related to the business and investments made under Section 80C to avail of deductions.

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Don’ts before you file your Income Tax Return

Mistakes in personal details

Entering incorrect information for your bank account, mailing address, phone number, or TAN (Tax Deduction and Collection Account Number) can slow down your refund. This means you might not receive important notices or have your refund deposited on time.

Here's why each detail matters:

• Bank Details: Mistakes in your IFSC code or bank account number can lead to delays in crediting your refund.
• Postal/Email Address: Incorrect addresses can cause notices or refund checks to be delivered late.
• Mobile Number: An outdated phone number might prevent you from receiving important updates from the Income Tax Department (ITD) regarding your return or refund.
• TAN: An incorrect TAN can lead to the non-issuance of Tax Deducted at Source (TDS) credit, resulting in you owing more taxes or receiving a smaller refund.

Review these details before submitting your tax return to ensure a smooth refund process.

Don’t forget to claim deductions and exemptions

While paying taxes isn't always fun, the government offers various deductions under Section 80 to help you reduce your tax burden. Even if you didn't inform your employer about these investments or deductions, you can still claim them when you file your Income Tax Return (ITR). Remember, forgetting to declare them on your ITR means you lose the chance to claim them later.

Forget to report exempt income

Even though you don't pay taxes on income like dividends or long-term capital gains, it's still important to report it. This helps build your credibility with the tax department and avoids processing delays.

Wait till the last date

Don't wait until the last minute to file your tax return. Rushing can lead to errors and missed deductions. Plan ahead and file early for a smoother process.

Miss the deadline

There are penalties for filing late. This year, the fee for salaried taxpayers filing after July 31st is ₹5,000 (₹1,000 for income below ₹5 lakhs). It gets even higher after December 31st. File on time to avoid unnecessary charges.

Get confused between financial and assessment years

Many taxpayers accidentally use the wrong year when filing their returns. This happens when they confuse the Financial Year (FY) with the Assessment Year (AY). The FY is the period you earn income (e.g., April 1, 2023 to March 31, 2024). The AY is the following year when you file your return and pay taxes on that income (e.g., for FY 2023-24, you'd file in AY 2024-25). Mixing these up can lead to errors and change your tax amount owed.

Now you know what you should and shouldn't do while filing your Income Tax Return. However, if you still feel anxious about filing your ITR, seek help from our online CAs. They are experts in maximizing your tax refund and accurately filing your Income Tax Return. Book eCA Now!

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