How to E-File Income Tax Return - Do's & Don't at incometaxindiaefiling.gov.in and incometaxindia.gov.in

How to E-File Income Tax Return - Do's & Don't at incometaxindiaefiling.gov.in and incometaxindia.gov.in

Many people are new to the world of e – filing of Income Tax Returns at incometaxindiaefiling.gov.in and incometaxindia.gov.in. As the paper form of return is now outdated, people are moving towards the technology to file online returns. There are many complications and unknown process in e-filing of return. We are presenting here a helping guide for filling the major schedules from General Schedule i.e. Schedule of Personal Information to Schedule of Foreign Assets for all of you who file return online in any of the Tax Return Forms i.e. ITR. Let us have a look at Do’s and Don’ts i.e. certain precautions to be taken at the time of e-filing the Income Tax Return.

Schedule wise safety measures:

Ø  PART A – General Schedule (Schedule for Personal Information):

-          The following details entered by you in the Tax Return Form must be as per PAN database:

o   Name

o   Date of Birth

o   Sex

If it does not match the PAN database then an error will be generated while filing the return. 

      -          Always be careful in entering your address and e – mail ID. As you will be communicated by the Income Tax Department on the basis of address and ID in the return if the same are wrong then you may not be receiving communications properly and this will be hazardous.

      -          Provide exact telephone number as you will receive all SMS communication by this number.

      -          Be cautious while selecting your residential status as the mistake in selecting the residential status may hinder some of your tax benefit treatment.

Ø  PART A – Balance Sheet, Profit and Loss Account, Other Information and Quantity Details Schedules:

      -          Fill the details in Balance Sheet and Profit and Loss Account as per the Books of Accounts prepared by you.

      -          Don’t forget to provide all the details of disallowed additions, Previous Year disallowed expense that can be claimed in the current year etc. Go through the entire schedule this will save a major amount of tax.

      -          In case the Income Tax Return is of an entity whose accounts are auditable, the detail of quantity of stock is to be provided. Be as specific as you can, as stock is the field that creates danger at the time of scrutiny.

Ø  PART B – Computation of Total Income and Tax Liability:

      -          The schedules of all the heads should be filled accurately so that the Total Income will be accurate. 

      -          Keep watch that your salary income must match with the figure in your TDS Certificate.

      -          Be careful in filling the details that are ambiguous and may create single income to be calculated twice. Or the expense will not be considered. For example don’t forget to enter details of Depreciation Allowed as per Income Tax else the benefit will not be available.

      -          See that the Loss under the Head Income from House Property has the same net effect in the final value.

      -          IN the Tax Liability schedule see that you have entered proper details of the advance tax paid.

      -          Tally your TDS and TCS credit with 26AS so if they are less or more you can intimate it to the concerned authority.

      -          The next thing is enter the Bank details such as Account Number, Bank Name, MICR Code and IFSC code as per their specific format.

Ø  Schedule S: Details of Income from Salary: 

      -          Salary amount should be in harmony with the amount in TDS Credit Statement. 

      -          Enter Basic Salary and other parts of salary net of TDS.

      -          See the bifurcations properly of the part of salary which are confusing such as:

o   House Rent Allowance and Rent free Accommodation

o   Medical Allowance and Medical Reimbursement etc.

This will affect your tax on income so proper bifurcation is necessary.

Ø  Schedule HP: Details of Income from House Property: 

      -          In case where the house property is let out and there is loss under such head of income you have to provide all the details pertaining to house property to claim such loss.

      -          When the property is owned by joint owners, check the option “Is the Property Co-owned?” And enter the amount of rent in the ratio that you own the property.

Ø  Schedule BP: Computation of income from Business & Profession:

      -          Enter specific expenses under respective heads only such as Depreciation, Interest, Salary etc. should be shown under specific heads and not as expense as a whole under one head.

      -          Items like income from interest, speculative business etc shown in P& L A/c in the books should be shown separately under the respective heads. They must be first disallowed form the P & L A/c.

      -          At first the depreciation is added back to the profit, so Depreciation as per Income Tax is to be provided in the schedule of Depreciation on Assets and the amount of allowable depreciation will be than deducted to arrive at true profit.

      -          All the disallowed Income and Expenditure must be entered in Other Information schedule so that accurate total income can be arrived at.

      -          Appropriate Business Code should be selected to avail business related benefit from tax.

Ø  Schedule CG: Capital Gains: 

      -          Always keep in mind to claim deduction under section 54 if eligible. 

      -          Be sure that the Capital Gain arising out of different types of assets should be considered and entered separately in the schedule.

      -          As per the provisions of the Income Tax Act, capital gain is to be paid in the quarter in which it arises, so you have to enter details of such capital gain tax paid.

      -          You have to enter the details of full consideration received on sale of asset.

Ø  Schedules OS : Income from Other Sources:

      -          The point to be kept in mind is Interest from saving bank should be entered at proper place as the same is allowed as deduction as per the provisions of Section 80TTA.

      -          Winning from Lotteries, Speculative Income etc attracts special tax rates so don’t consider them in the income that are taxed at normal rate.

      -          In case you receive any Dividend from domestic company, the same is first to be recorded as Income under the head Income from Other Sources and then it will be allowed as deduction under Section 10(34) of the Income Tax Act.

Ø  Schedules Depreciation on Plant & Machinery, Depreciation on Other Assets:

      -          You have to compulsorily enter the amount of depreciation on Plant & Machinery and other assets along with addition and reduction in such assets.

      -          To claim full amount of depreciation, Depreciation entered and P & L should match the Depreciation As per Income Tax calculated as above.

Ø  Schedules of Details of Income after Set off of B/F losses of earlier years and Details of Losses to be carried forward to future years:

      -          Income Tax Act allows the loss to be carried forward for eight years. So claim it if you have any unabsorbed depreciation. 

      -          If you file the loss return after the due date of filing the return, you will not be able to carry forward such loss. So file the loss returns before due date. This will be helpful in saving tax in subsequent years.

      -          Claim the loss of different nature under the respective Heads.

      -          Enter proper date of filing the return.

Ø  Schedule of Unabsorbed depreciation:

      -          Depreciation varies in Income Tax and Companies Act in India. This creates a timing difference and leads to an amount of unabsorbed depreciation. In this schedule you have to provide the amount of such unabsorbed depreciation.

Ø  Schedules of deductions under Chapter VI-A, Section 10 and MAT Credit:

      -          Always claim the exemptions only if you have the supporting evidence. It is a pre-requisite. 

      -          While claiming exemption under Section 80G for donation, first check the type of institution where you have donated. It will help you calculate the amount eligible for exemption.

      -          To avail MAT credit fill all the details accurately of tax paid.

Ø  Schedule for Income of Specified Persons includible in the income of assessee, Income Chargeable to Income Tax at special rates and details if Exempt Income:

      -          You have to provide the relationship of the person whose income is to be clubbed and also the nature of such income. 

      -          Certain Income are taxable at special rates such as capital gain of different nature may attract different type of rates so fill correct rate so that correct tax may be levied on such income.

      -          Exempt Income such as Life Insurance Refund, PPF Interest etc are to be shown to claim the exemptions of such income. Don’t fill those details under the taxable heads.

Ø  Schedule IF: Information regarding partnership firm in which you are partner:

      -          Provide accurate PAN, so that it becomes easy for Income Tax Department to cross tally the figures and details in case further assessment is called required.

      -          Don’t merge Interest received on capital in partnership firm with salary or remuneration by whatever name called because salary, remuneration etc are exempted while interest on capital is a taxable income.

Ø  Schedule IT: Details of Advance Tax and Self Assessment Tax Payments of Income Tax:

      -          Enter the details of one Challan in one place and in case there are more than one challan, enter the details separately.

      -          Be accurate in filling the Challan Number, date and amount otherwise it may not match the Income Tax database and you may not receive the credit or benefit of the same.

Ø  Schedules TDS & TCS:

      -          Always claim the TDS or TCS credit in the respective schedule.

      -          Consider the Tax Credit Statement 26AS to match claim the TDS TCS Credit.

      -          Always enter the figure of TDS in the schedule of TDS and TCS in the schedule of TCS.

Ø  Schedule FA: Details of Foreign Assets:

      -          The main point to be kept in mind is that you have to provide all the details of assets belonging to you outside India such as Bank Account, Immovable Property etc.

      -          Never forget that the return form also asks about the details of the account in foreign country in which you have signing authority in that account.

      -          If you hold interest in any entity and / or you are a trustee in trust created under any law outside India than also you need to provide all the details so keep them ready with you.

Ø  General Measures:

      -          Don’t forget to provide correct address and bank details so that you can receive your refund. 

      -          Always send your ITR to CPC Bangalore (in case you have not digitally signed it) within 120 days from the date of E – filing of return.