Before you actually sit down to file your Income-Tax Return (ITR), there are certain tasks, which you should complete beforehand. Let us discuss in detail. Verify details from Form:26AS. The newly introduced Form No:26AS, which should be available to you by of July 15, 2020, will have more details as compared to old details. The new details, which will now be available to you from this year include details of the email ID and mobile number registered with the Income-Tax (I-T) Department. Please verify that these are the ones you are regularly using. In case you have changed any of these, please get the same rectified in the records of the I-T Department to ensure that communication sent by the department is received at your end in time.
The 26AS also has details of taxes paid by you and on your behalf. As you can’t physical documents of taxes paid with the physical ITR or upload it, while filing your ITR online, credit for Tax Deducted at Source (TDS) as well any tax paid by you, is given on the basis of data available with income tax department. Since this data is readily available in Form No:26AS, it is strongly advised that you verify these details well in advance so as to ensure that any corrective measure needed can be taken well in time.
Please verify that all the tax deducted, collected or paid is correctly reflecting there. Any discrepancy should be promptly pointed out to the deducutor or the bank where tax was deposited with a request to take appropriate corrective steps to ensure that true tax credit is correctly reflected. This exercise will ensure that you will get proper credit for your taxes when the return is processed.
The data of TDS and advance tax are furnished to the Income-Tax Department through returns of TDS filed by the person deducting the tax or by the bank in cases taxes are deposited by you in the bank.
Proper credit for such taxes may not reflect in form No:26AS due to any mistake either on the part of the bank or the tax deducutor. Additionally the new form 26AS will have various details like those of cash deposited, cash withdrawn, fixed deposits made, transactions of share and mutual funds, sale and purchase of immovable property over a certain monetary limit. So, it is advisable to verify these details as reflected in the Form: 26AS with your records in order to ensure accuracy of the data. Form No: 26AS can be viewed either through your internet banking login or through login to your account in the Income-Tax department web site. The above verifications will help you avoid any mistake which may occur in your ITR filing of omission of reporting of any such transaction.
Verify the form number 16 /16A:
Since various dates have been extended this year due to Covid-19 pandemic, you would not have yet received you Form No:16 or Form No:16A in respect of TDS. However, it is strongly advised to ensure that details as reflected on this form are correct. It is important to ensure that details like your PAN is correctly mentioned on the Form No:16 issued to you by your employer. Please also verify that all the exempt allowances like HRA, LTA, etc., are correctly shown as exempt in the Form:16. There may be some discrepancy due to you having failed to submit the requisite documents in time and consequently the employer must have deducted tax on such allowances treating them as taxable. It is also advised to verify that amount of various deductions, which are available to you for various payments like life and health insurance premium, home loan repayment, interest on education loan, school fee, etc., are properly and correctly mentioned in the Form No:16 as your Chartered Accountant (CA) will generally consider these numbers, while filing your ITR. In case of any discrepancy in Form No:16, bring it to the notice of your employer immediately, so that the same gets correctly in the records of the tax department well in time before your ITR is processed.
Similarly, also verify the Form No: 16A received from bank, etc., for correctness for PAN number, amount of income shown and amount of TDS mentioned on it. Verification of PAN is very important in the first year of your relationship with the tax deducutor as the probability of wrong mentioning of PAN is very high in the first year itself.
Open the capital gains account before November 30, 2020:
There are certain things, which need to be done by the due date of filing of your ITR even if you are not able to file your ITR by the due date. Like though the law allows you a longer period for making investment in a residential house for availing exemption under Section 54 or 54F, it also requires you to deposit the unutilized money in a Capital Gains Account to be opened with specified bank by due date of ITR, if you are not be able to utilise the required money fully by the due date of filing of the ITR.
Generally, the due date for filing your ITR is July 31 every year, but since it has been extended for this year, the time limit for putting the money in Capital Gains Account also gets extended till November 30, 2020 this year.
I am sure the above discussion will help you better prepare for filing of your ITR.