Introduction
The financial year 2023-24 is over and it is time to gather all your documents for filing income tax return. Though the deadline for ITR filing 2024 for individual taxpayers is July 31, the process has already started.
In the income tax return filing season salaried individuals falling under tax net and other taxpayers should keep all investment proofs and necessary documents ready for tax filing procedure.
The income tax return form ITR-1 cann be filed by a resident individual whose income does not exceed ₹50 lakh during the financial year and the income is from salary, house property, family pension income, agricultural income (up to ₹5,000) and other sources such as interest income from bank FDs or other investments
One of the most important documents is Form 26AS, which is provided by the Income Tax Department for every taxpayer.
Form 26AS, often referred to as the Tax Credit Statement, serves as a record of various tax-related transactions associated with your PAN (Permanent Account Number). It includes important details such as tax deducted at source (TDS), tax collected at source (TCS), advance tax payments, self-assessment tax payments and high-value transactions undertaken during a financial year.
What is Form 16 and 26AS?
Forms which are important during the tax filing season includes: Form 16 (issued by employers, summarising salary and TDS), Form 16A (non-employment income and tax deductions), Form 16B (taxes on the sale of immovable property), Form 16C (taxes on rental income from house property), Form 26AS (summary from the Income Tax Department showing taxes deducted and paid), Annual Information Statement (detailed overview of Form 26AS), and Taxpayer Information Summary (aggregated summary of a taxpayer’s information).
When it comes to filing ITR, Form 26AS assumes paramount importance. Gone are the days when taxpayers had to manually procure this document. Today, Form 26AS has evolved to include a broader range of financial activities, including foreign remittances, investments, dividends and other financial details.
Form 26AS provides a consolidated overview of tax-related information, enabling taxpayers to ensure the accuracy of TDS certificates and verify that the deducted tax is duly deposited with the Income Tax Department.
Form 26AS acts as a repository of vital tax-related information. It includes information on the following:-
Commonly Used ITR Forms by Salaried Employees
1. For residents with income from one house property, pensions, salaries, and other sources ITR-1 (Sahaj) is used.
2. ITR-2 is used for residents and Hindu Undivided Families (HUFs) with income from multiple sources, including capital gains.
3. ITR-3: For HUFs and individuals in business or related professions.
Selecting the Right ITR Form
Always choosing the right ITR form is important for accurate income reporting, claiming eligible deductions, and avoiding delays or penalties. The factors include:
1. Income sources like salary, business income, capital gains, etc.
2. What is the residential status: Resident, non-resident, etc
3. Other Considerations include the type of business, foreign income, agricultural income, etc.
What Documents Are Needed?
1. For salary records, make sure to have Form 16, bank statements, salary slips.
2. For business revenue keep the profit and loss statements, Invoices, Receipts.
3. For investments, provide details of income from investments like dividends and capital gains, documents for Section 80C investments (PPF, NSC, ULIPs, ELSS, LIC policies).
4. For personal identification details use PAN card (essential for TDS deductions and tax refunds), and Aadhaar card (mandatory under Section 139AA of the Income Tax Act).
Penalties for Inaccurate Reporting
Filing inaccurate income in your ITR can have severe consequences. The assessing officer may classify this as either misreporting or underreporting of income, leading to penalties ranging from 50 per cent to 200 percent of the tax due on the under reported amount, as per Section 270A of the Income Tax Act, 1961. Therefore, it is crucial to ensure that the income reported in the ITR is accurate.
Conclusion
In conclusion, staying informed, organized, and proactive in tax filing and documentation is essential for salaried employees to navigate the tax landscape confidently.
By adhering to these practices, taxpayers can ensure compliance, minimize the likelihood of disputes with tax authorities, and maintain peace of mind regarding their financial obligations.
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