Simple and Advance preparation for ITR Filing

September 1, 2021 By Damodhar C Off

Simple and Advance preparation for ITR Filing (FY 2020-21 / AY 2021-22)

The ITR filing season has begun. Before you file your ITR, you need to do some groundwork to ensure that the actual process of working out the numbers for your ITR and filing is smooth and seamless. Let’s discuss the preparatory work you need to do in advance for this purpose.

# For salaried employees

For those of you who receive a salary, you must first verify the details as specified in your form number. 16, contains details of the various taxable and deductible portion of your salary. It also includes details of various discounts available to you based on the documents you submit to the employer. If you fail to submit supporting documents, there is every possibility of some exemption allowance being considered as a tax deduction in Form 16. For example if you do not submit rental receipts for your HRA (House Rent Allowance) claim or Proof of Travel LTA (Leave Travel Assistance) claim the same tax may be levied and tax deductible by your employer. Similarly, you have failed to provide details of various deductions like Home Loan Payment, NSC, ELSS, PPF, School, NPS, Health Insurance etc. This can happen due to delay in submitting proof or due to oversight by your company finance department. If you find that the proper deductions are not specified in Form 16, you may not be able to change it so quickly, but you can always claim these legal deductions when you file your ITR. So please bring such cases to the attention of your consultant so that he can make a proper claim when filing the ITR.

Also verify that the gross salary is shown correctly in the total form number. 16 Your ITR will assist you in verifying the various amounts deducted from your salary that you claim when you file according to the monthly salary slips or the amount credited to your bank account after calculating various deductions such as PF, occupation tax and income tax.

# For self-employment

Based on the gross receipt of your business or profession during the year, you can find out in advance whether you are eligible for the hypothetical tax option. If your turnover limit is exceeded, you will need to have your accounts audited by a chartered accountant and upload the audit report to the tax department website. If you need to audit your accounts, you will have more time to file your ITR.

Those who are subject to tax deduction on the basis of business receipts, should verify the amount of tax credit reflected in Form No. 26AS and correct it with your books of accounts. There may be some discrepancy due to year-end transactions or the different accounting practices that you and your customer / client follow. This is important because you will only get credit for TDS based on the form number. 26AS and not as you claimed. So if you see any difference, please get explanation from the detector. This can also happen due to the exclusion of the accounting of your invoices or the non-payment of tax deducted by the deductor to the government credit.

# For those who invest in stock exchanges or mutual funds

If you are investing in direct equity, you will need to obtain an account statement from your broker and a statement from your depository for your demat account for the shares sold and purchased during the year to calculate capital gains. You can not go through the bank statement alone as there may be some buying and selling transactions on the same day, the effect of which may not be fully reflected in your bank statement. For your investments in mutual funds, please obtain a detailed statement of the transactions that took place during the year you were dealing with the various mutual funds. Some of these transactions, such as STP, may not be reflected in your bank account and may not be reported. You can also request a capital gains statement from the mutual fund house or the relevant registrar for cross-checking your work.


# For Interest Income

Those who invest in fixed deposits in banks should obtain a year-round interest certificate to ensure that all interest income is fully in your ITR. Accounting for Interest Income Those who follow the accounting system are required to show interest in respect of cumulative deposits. Even if you follow a cash basis, you should include interest accrued on deposits renewed after maturity, as these are not reflected in your bank account.

# Form No. 26AS and Verification of Transactions in Your Bank Statement

Each of you should download the latest Form No. 26AS to confirm that the full tax credit for TDS is available here according to your books and to verify that the total income including interest is included in your income. Since Form No. 26 AS now contains the financial transactions you have registered during the year, verify that the transactions registered in 26AS belong to you and the relevant income will be considered while your tax is working. Please see the bank statements throughout the year to find out any non-regular and out-of-sight revenue items. The bank account also reflects certain items / expenses for which you can claim tax benefits, as not all chartered accountants will scan your bank statement.