Things to do before ITR filing: ITR form, Tax regime, verify prepaid taxes, avail eligible deductions

Has the deadline for filing your ITR arrived? Well, regardless of how near or far the last date is, you should be prepared well in advance. Filing income tax returns can be quite a hassle if you are not prepared. But even if the process seems complex, it has numerous financial benefits. Not paying your taxes on time can land you in trouble with the IT authorities.

So, do you know how to file ITR? We’ve curated a list of some important points to remember and double-check before you file your taxes. Let’s dive in.

1. Know the difference between AY & FY

In India, each accounting year starts on April 1 and ends on March 31 of the following year. We need to understand what the Assessment Year (AY) and Financial Year (FY) are in the context of tax filing. FY refers to the year in which you earned the income. Since taxes are evaluated the next year, the year immediately following the FY is known as the AY.

Related: Income Tax Returns: Who Should File Them And When?

2. Be aware of your income tax slab

Different income groups are taxed at different rates, depending on which slab they fall under. It is vital to determine the right income tax slab to pay the correct amount of taxes you are liable for. Here’s a quick summary of the latest tax slabs as per the new tax regime:

• Income up to Rs 2,50,000 per year is not taxable.
• Those earning between Rs 2,50,001 and Rs 5,00,000 are taxed at 5%.
• Those earning between Rs 5,00,001 and Rs 7,50,000 are taxed at 10%.
• Those earning between Rs 7,50,001 and Rs 10,00,000 are taxed at 15%.
• Those earning over Rs 10,00,000 and up to Rs 12,50,000 are taxed at 20%.
• Those earning between Rs 12,50,001 and Rs 15,00,000 are taxed at 25%.
• Any income over Rs 15,00,000 is taxed at 30%.

A surcharge is applicable for those earning over Rs 50,00,000. The rate of the surcharge increases in different brackets.

3. Pick the correct ITR form

There are several different ITR forms available. You need to select whichever applies to you based on factors such as your residential status and income from other sources. Read all the instructions related to the specific ITR form before finalising it. 

Here’s a quick round-up of the different ITR forms:

4. Select the appropriate tax regime

The Finance Act, 2020, introduced a new tax regime with modified tax slabs and rates. This new regime is optional and was introduced in place of previous prescribed deductions and exemptions. Taxpayers can now choose between the old and the new regime, depending on whichever they find more advantageous.

Related: Should You Stick To The Old Tax Regime Or Move To The New One?

5. Meet the disclosure requirements

While filing your ITR, you need to be very careful about disclosing all required assets and financial investments. Here are some things you must necessarily disclose:

• Details of all bank accounts (Indian)
• Details of unlisted equity shares
• Details of directorship held (Indian and foreign)
• Schedule assets and liabilities
• Schedule foreign assets

6. Verify your prepaid taxes

You are required to fill Form 26AS to verify your prepaid taxes along with tax deducted at source (TDS), advance tax, and self-assessment tax. In case of any discrepancies, notify the concerned party for rectification to enable seamless processing of the tax return from the tax department.

7. Avail of eligible deductions

As an individual entity, you are entitled to certain deductions on your total income. These deductions reduce the total income, thereby reducing your tax liability. Go through the relevant sections of the Income Tax Act to find out which deductions apply to you.

Related: Common Tax Filing Myths Busted

Last words

So these are some things you need to do before you file your income tax return. This list is not exhaustive; there is much more you should be careful about when filing your ITR. The purpose of this quick guide is to help you understand the basics of ITR filing so that you are prepared. After all, it is good to understand the process than depend exclusively on a tax consultant.