4 steps to file your income tax return ACCURATELY

In the earlier article we discussed about the provision of the Income Tax Act, as to who is required to file his income tax return. Since the financial year has already ended, this is the time to plan for filing of income tax return for the year which just ended on March 31, 2011, so as to avoid last minute rush and worry.

In this article we shall discuss the preliminary steps to be taken before your file your income tax return.

1. Verify your tax credit

Almost all of you get income tax deducted out of your income before it is paid to you. For salaried employees it is TDS on salary primarily and for self-employed it is TDS on fee and consultancy charges etc. received by them.

Even the retired persons are not spared of this. TDS is also deducted on the interest paid/credited on their fixed deposits and even senior citizen deposits.

The income tax department e-mails you with form no. 26AS containing details of TDS deducted out of your income and credit in your account of records maintained by the income tax department. In case you have not received the same, you can view the same from the link https://onlineservices.tin.nsdl.com/TIN/JSP/security/PanLogin.jsp after you register yourself here: https://onlineservices.tin.nsdl.com/TIN/PanRegistration.do.

In case you find that the tax deducted out of moneys paid to you is not reflected in the above statement which may be due to various reasons like TDS not deposited, returns of TDS not filed or errors in filing of the returns etc. You need to take up the matter with the deductor of tax to get the details in form no. 26AS corrected.

This is very important in view of the fact that credit for TDS is given only based on the amounts reflected in form No. 26AS.

Please obtain form No. 16 in case you are a salaried employee and your employer has deducted tax. Also obtain form no.16A from the bank in case tax has been deducted.

While filing your income tax returns you are required to fill in the details of tax deducted out of your income. You are also required to provide various details of the tax deductor.

You need to compare the details as appearing on your TDS certificate with the form No. 26 AS and get the errors rectified. Though you are not allowed to attach the TDS certificate with your income tax returns, these TDS certificate will help you in substantiating your position in case of any difference between the TDS credit given to you and tax actually deducted out of your income.

In addition to your regular income there are a few sources of incomes which, though relatively small, are required to be included in your income. These are income received on your bank deposits.

Even interest income earned by you on your saving bank account is also taxable and you are supposed to include the same in your income and pay tax on the same. Income on all the investments is not exempt.

Only long-term capital gains on shares or equity-oriented units are exempt provided security transaction tax has been paid on the same. Therefore any income earned by you on bonds and debt schemes of the mutual funds are taxable.

Even if you have swapped two mutual schemes of the same mutual fund, you are required to calculate the capital gains on sale of earlier scheme even though this may not get reflected in you bank account. Any income earned by investment in the name of your minor child is also required to be included in the income of the parent whose income is higher.

Therefore please take out the details of income earned by your minor child and get the same included in your income.

In case you own more than one house and both are occupied by you or your relatives, you are supposed to offer for tax notional income in respect of other houses of your choices based on the rent which the other property/ies are expected to fetch.

The above preparation will help you in accurately and correctly filing your income tax return.