5 Tax Tips When Filing Income Tax
Filing income tax returns before the deadline and in an accurate manner will help taxpayers avoid any penalties or problems in the future with the Income Tax department. It’s a fairly simple process but the taxpayers must be careful, wise and exercise immense caution while filing income taxes.
To avoid any glitches and make the filing process smooth and seamless, here are some of the important points to keep in mind, before filing tax returns:
Choosing the correct ITR form for filing
Filing returns using the wrong form is a common mistake made by taxpayers. The existence of multiple forms and determining the right one can get confusing. So, the income sources will determine which form is applicable for the taxpayers.
Keeping all financial and tax related documents in order
These documents are only required for accurate computation of the total taxable income. These documents include form 16 and form 16A, account statements, property details, contract notes, details of tax paid in advance and any such documents with tax implications.
Mentioning cash deposits in bank accounts
If there is deposition of a large amount of cash in any of the bank accounts, it should be reported. The undisclosed amounts of cash could bring the taxpayers under the scrutiny of the Income Tax department. If these deposits are a part of ‘unaccounted income’, negligence in filing tax returns will make them liable for the tax, plus a penal and interest charge.
Accurate calculation of total income generated from different sources
Determining the sources of income is the first step towards computing the total income and claiming dedications as applicable.
The different heads of ‘sources of income’ are as follows-
• Salary
• House property
• Profits and gains from business and profession
• Capital gains on the sale of assets and shares
• Income from other sources like bank interests.
Mentioning of income obtained from dividends
Dividend income was previously exempt from tax, irrespective of the amount of dividend received. But now dividend income will also be taxable and it is required to be reported while filing income tax returns.
Our team of experts at The Accounting & Tax can deliver quality advisory services on different sectors like individual and company income tax filing, NRI property taxation, withholding taxation issues, capital gains tax, etc.
