Income tax returns: Report capital gains, don't wait till July 31. Mistakes to avoid this tax season
Before you start, download Form 26AS and the Annual Information Statement (AIS) from the I-T department’s e-filing portal (incometax.gov.in). Ensure that the details in these forms match your Form 16 and other financial records.
- Jun 14, 2024,
- Updated Jun 14, 2024 9:41 AM IST
Filing your Income Tax Return (ITR) might seem daunting, but with a bit of preparation, you can make the process smoother. Here’s a concise guide to help you avoid common mistakes and ensure a hassle-free tax season for the financial year 2023-24 (assessment year 2024-25).
1. Verify Form 16 and Form 26AS Data Before you start, download Form 26AS and the Annual Information Statement (AIS) from the I-T department’s e-filing portal (incometax.gov.in). Ensure that the details in these forms match your Form 16 and other financial records. Any discrepancies can lead to a notice from the I-T department.
2. Choose the Correct ITR Form Using the wrong ITR form can result in inadequate disclosures and potential notices. For instance, if you have capital gains but file with ITR-1 instead of ITR-2, you may face issues. Make sure you select the correct form for your financial situation.
3. Disclose Foreign Assets If you’ve worked abroad and have foreign bank accounts, shares, or other assets, ensure you disclose these in your ITR and Schedule FA. Failure to do so can attract penalties up to Rs 10 lakh and even legal action under the Black Money Act.
4. Claim Eligible Deductions Only Avoid claiming ineligible deductions. The I-T department uses advanced technology to detect suspicious claims. Fraudulent deductions can lead to penalties and notices.
5. Report Capital Gains The AIS and Form 26AS track all your transactions, so any unreported income, such as from the sale of shares or mutual funds, will be noticed. Be transparent to avoid notices for non-disclosure.6. Preserve6. Deduction Documents Keep all documentation for deductions, especially if you opted for the old tax regime. Mismatches between Form 16 and your ITR can result in notices, so be prepared to verify your claims.
7. Disclose Income from Previous Employers If you switched jobs, you’ll have dual Forms 16. Declare income from both employers to avoid discrepancies that can trigger notices.
8. File Early Avoid the last-minute rush. Filing early helps you avoid missing the deadline due to missing documents or technical issues on the I-T department’s website. Filing after July 31 incurs late fees.
9. Complete E-Verification After submitting your ITR, complete the e-verification process using your Aadhaar, pre-validated bank account, or demat account. Delayed verification can delay refunds and, if done after 30 days, may incur late fees.
Filing your Income Tax Return (ITR) might seem daunting, but with a bit of preparation, you can make the process smoother. Here’s a concise guide to help you avoid common mistakes and ensure a hassle-free tax season for the financial year 2023-24 (assessment year 2024-25).
1. Verify Form 16 and Form 26AS Data Before you start, download Form 26AS and the Annual Information Statement (AIS) from the I-T department’s e-filing portal (incometax.gov.in). Ensure that the details in these forms match your Form 16 and other financial records. Any discrepancies can lead to a notice from the I-T department.
2. Choose the Correct ITR Form Using the wrong ITR form can result in inadequate disclosures and potential notices. For instance, if you have capital gains but file with ITR-1 instead of ITR-2, you may face issues. Make sure you select the correct form for your financial situation.
3. Disclose Foreign Assets If you’ve worked abroad and have foreign bank accounts, shares, or other assets, ensure you disclose these in your ITR and Schedule FA. Failure to do so can attract penalties up to Rs 10 lakh and even legal action under the Black Money Act.
4. Claim Eligible Deductions Only Avoid claiming ineligible deductions. The I-T department uses advanced technology to detect suspicious claims. Fraudulent deductions can lead to penalties and notices.
5. Report Capital Gains The AIS and Form 26AS track all your transactions, so any unreported income, such as from the sale of shares or mutual funds, will be noticed. Be transparent to avoid notices for non-disclosure.6. Preserve6. Deduction Documents Keep all documentation for deductions, especially if you opted for the old tax regime. Mismatches between Form 16 and your ITR can result in notices, so be prepared to verify your claims.
7. Disclose Income from Previous Employers If you switched jobs, you’ll have dual Forms 16. Declare income from both employers to avoid discrepancies that can trigger notices.
8. File Early Avoid the last-minute rush. Filing early helps you avoid missing the deadline due to missing documents or technical issues on the I-T department’s website. Filing after July 31 incurs late fees.
9. Complete E-Verification After submitting your ITR, complete the e-verification process using your Aadhaar, pre-validated bank account, or demat account. Delayed verification can delay refunds and, if done after 30 days, may incur late fees.