Key Things Before Filing Your Income Tax Return
- Filing your Income Tax Return (ITR) is not just a legal responsibility but also a smart financial habit. Whether you’re a salaried employee, a freelancer, or a business owner, filing your ITR on time and correctly can save you from future complications. Here’s a checklist of key things to keep in mind before you start the ITR filing process.
Salaried Class
Collect All Essential Documents
- Form 16 : Issued by your employer, detailing salary paid and TDS deducted.
- Form 26AS : A consolidated tax credit statement to verify TDS, advance tax, and other tax credits.
- Salary Slips : Useful for cross-checking allowances, bonuses, and deductions.
- Interest Certificates : From savings accounts, fixed deposits, or any other interest-earning instruments.
- Investment Proofs : For deductions under Section 80C, 80D, etc. (e.g., LIC, ELSS, PPF, health insurance).
- Rent Receipts/Loan Statements : If claiming HRA or home loan deductions
ITR Form
For most salaried individuals:
ITR-1 :- applies if income is below ₹50 lakh and you have income from salary, one house property, or other sources.
ITR-2 :- if you have capital gains, more than one property, or foreign income.
Deductions & Exemptions
- 80C : Life insurance, PF, tuition fees, ELSS, NSC.
- 80D : Health insurance premiums.
- 80TTA : Savings account interest (up to ₹10,000)
- 24(b) : Home loan interest (up to ₹2 lakh on self-occupied property)
- HRA, LTA, Standard Deduction : Specific to salaried individuals
Reconcile Income and TDS
Ensure that:
- The income in your Form 16 matches with Form 26AS
- All interest and side incomes are reported—even if no TDS is deducted
- There’s no mismatch between declared income and actual bank/investment records
Mistakes here could delay your refund or result in scrutiny.
Keep Records for Future Reference
After filing:
- Save the acknowledgment (ITR-V)
- Keep copies of filed return, Form 16, tax challans, and investment proofs
These may be required for loan applications, future filings, or in case of a tax notice.
Non-Resident Indian (NRI)
Determine Your Residential Status
- Understand the NRI Definition: According to the Income Tax Act, your residential status is based on your physical stay in India during a financial year
- Check the Number of Days Stayed in India: Use the 182-day rule or 60-day/120-day rule, as applicable.
Collect All Required Documents
- Passport & Visa Copies: To prove your NRI status if required.
- Bank Account Statements: Include NRE, NRO, and foreign accounts.
- Form 16A / Form 16: For TDS details if applicable.
- Investment Proofs: Include mutual funds, stocks, real estate, etc.
- Rental Income Details: If any property in India is rented out.
- Form 26AS: To verify taxes deducted and reported to the Income Tax Department.
- Foreign Income Documents (if taxable in India): If you have any global income that needs disclosure.
ITR Form
Most NRIs file ITR-2, but depending on the nature of income (e.g., business or profession), you might need ITR-3.
Double-Check Taxability of Income
- Income from Salary: Taxed in India only if earned or received in India.
- Interest on NRE and FCNR Accounts: Exempt from tax; interest on NRO is taxable.
- Capital Gains: Taxed if arising from Indian assets like property or shares.
Claim Double Taxation Avoidance Agreement (DTAA) Benefits
- Avoid being taxed twice on the same income in India and your country of residence.
- Maintain Tax Residency Certificate (TRC) and other necessary documents
Link PAN with Aadhaar (If Applicable)
- Although NRIs are exempt in most cases, it’s best to check if linking is required based on your situation.
File Before the Due Date
- Usually July 31st of the assessment year.
- Late filing may attract penalties or interest on due taxes.
Keep Copies of All Submissions
- For future reference and to avoid compliance issues
Business Owner
Maintain Proper Books of Accounts
- Ensure that your books of accounts (cash book, ledger, purchase and sales records) are updated and properly maintained.
- Use accounting software or a professional accountant to keep records transparent and accurate.
Collect Supporting Documents
- Bank statements and cash transaction summaries
- GST returns and invoices (sales and purchases)
- TDS certificates (Form 16A)
- Loan or investment agreements
- Loan or investment agreements
- Advance tax or self-assessment tax challans
ITR Form
- Use ITR-3 – if you are a proprietor with income from business or profession.
- Use ITR-4 – if eligible for presumptive taxation under Section 44AD, 44ADA, or 44AE.
Claim Allowable Deductions
- Claim Allowable Deductions
- Business expenses (rent, salary to staff, travel, etc.)
- Deductions under Sections 80C to 80U (if applicable)
- Ensure accurate classification between capital and revenue expenditure
Verify Turnover, Profit, and Tax Liability
- Reconcile GST returns with books of accounts
- Ensure reported turnover and net profit are accurate
- Pay balance tax, if any, before filing
- Audit Requirement Check
Audit Requirement Check
- If your business turnover exceeds the prescribed limit (currently ₹1 crore or ₹10 crore with digital transactions), a tax audit is mandatory.
- File Tax Audit Report (Form 3CA/3CB and 3CD) before the ITR due date for audit cases.