Income Tax Return for AY 2020-21: How to prepare for filing of your ITR

In case you are engaged in business or profession, please verify whether you are eligible to opt for a presumptive taxation scheme based on t your gross receipts or turnover.

Income Tax Return for AY 2020-21: How to prepare for filing of your ITR

Before you actually sit down to upload your income tax return (ITR) or visit your Chartered Accountant for filing your ITR, you should do some groundwork to save the time as well to ensure that full particulars are submitted without any omission. Let us discuss what preparatory groundwork you should do for filing your ITR.

If you have a Salary income

By now all of you must have received your Form No. 16 from your employer if not please get it immediately as you will need it for filing of your ITR. Once you receive your Form 16, I request you to check this form thoroughly to verify that your employer has correctly shown the exempt allowance like House Rent Allowance as exempt. Also, verify that proper deductions under Chapter VIA for various items of investments and expenditures have been given to arrive at the taxable salary. It may happen that these exempt allowances or deductions are not reflecting in Form No. 16. This may happen due to any reason like delay in submitting the proof or due to oversight of the finance department of your Company. The deductions may be for items like life insurance premium, health insurance premium, home loan repayment, interest on an education loan or school fee, etc. If proper deductions have not been given against your salary please bring it to the notice of your consultant so that he makes a proper claim for such omitted deductions while filing the ITR.

Please also verify that the amount of gross salary is correctly shown in form no. 16 as per the salary slips received or the amount credited in your bank account after accounting for various deductions like PF, Profession tax and income tax, etc.

If you are engaged in business or profession

In case you are engaged in business or profession, please verify whether you are eligible to opt for a presumptive taxation scheme based on t your gross receipts or turnover. In case the turnover exceeds the prescribed limits, the books of accounts have to be audited and the audit report needs to be uploaded to the tax department website. In case the tax is deducted from your income prepare a reconciliation of the number of invoices and payments received. Please verify that the amount of TDS as per your books of accounts is duly reflected in your form No. 26AS, which can be download from the official income tax site. In case there is any variation you can seek clarification from the tax deductor. It may also happen due to various reasons like an accounting of invoices in different accounting years or non-deposit of tax deducted by the deductor to the government.

If you have Capital gains

For those who are mutual fund investors, please get a detailed statement of the transactions done during the year. Some of these transactions like STP may not reflect in your bank account and thus may go unreported. In case you are investing in shares through a broker please get the detailed statement. Verify that all the transaction as appearing in the statement are properly accounted for your in your income computation. You need to be careful particularly for the intra-day transactions where some shares have been bought against shares sold on the same day which is not reflecting in your bank statement.

In respect of Interest income

In case you have made fixed deposits with banks, please obtain interest certificates for the whole year from the bank to ensure that all the interest income gets included in your ITR. In the case of cumulative deposits, you will have to offer the interest income in case you are following the accrual system of accounting for the interest income. In case you are following a mercantile or cash basis, you will have to include the interest accumulated in case of any matured fixed deposit reinvested fully without receiving any interest in your bank as the interest in such case is assumed to have been received by you.

Source: LiveMint