Tax

Do’s and don’ts you must follow while filing your ITR!

25 July 2024

Let’s look at the things that one should do and shouldn’t do using the example of Mr. Aditya who is a Marketing Specialist at WOW Media Ltd. in Bangalore.

Mr. Aditya’s salary details

Components	Amount (Rs)
Basic Salary	5,00,000
HRA	2,50,000
LTA	20,000
Other Allowances	2,00,000
Bonus	1,00,000
Medical Insurance	50,000
Gross Salary	11,20,000
Less : Deduction
Employee’s contribution to provident Fund	60,000
Professional Tax	2,400
CTC Gross Salary Deductions	10,57,600

Note: Mr. Aditya doesn’t have any taxable capital gains

How you & Mr. Aditya can file ITR the right way?

~add{num,1}

Choosing the right form

There are 4 ITR forms

ITR Form	Who Should Use It
ITR‑1	Income up to INR 50 lakh from salary, pension, one house property, and other sources (like interest).
ITR‑2	Income from salary/pension, multiple house properties, capital gains, other sources (like interest), and foreign assets income.
ITR‑3	Those having income from a business or profession.
ITR‑4	Those with income from a business or profession under the presumptive taxation scheme.

Mr. Aditya should choose ITR-1, as his annual salary is less than Rs.50 lakhs and he doesn’t have any taxable capital gains.

Note: Filing using the wrong form can render the return invalid.

~add{num,2}

Claim your deductions and exemptions

An exemption refers to specific types of income that are not taxed, while a deduction is an amount subtracted from your income to lower the taxable portion.

The new tax regime does not allow any deductions or exemptions. However, the old regime offers various deductions and exemptions for taxpayers, including a standard deduction of Rs. 50,000.

~add{3,blog_highlight-block}

Which deductions and exemptions are allowed in your chosen tax regime?

For example, if Mr. Aditya is eligible for the following deductions, he can claim them according to the tax regime he opts for:

Components	Old tax regime	New tax regime
HRA	2,50,000	N/A
Standard deduction	50,000	50,000
Professional tax	2,400	2,400
80C deduction (ELSS)	1,50,000	N/A
80CCD(2) employer’s NPS contribution	50,000	50,000
80D Medical Insurance	50,000	N/A

~add{num,3}

Choosing the correct tax regime

Individuals with business or professional income can change their tax regime only once.

Salaried individuals like Mr. Aditya can switch between the old and new tax regimes each year during filing.

So Mr. Aditya has used our Advance Tax calculator to help him choose between a new tax regime and old tax regime. Following table reflects the information he got with the help of calculator.

Components	New Regime (Rs)	Old Regime (Rs)
Salary Income	11,20,000	11,20,000
Less exemptions :
HRA	N/A	2,50,000
Other allowances	N/A	2,20,000
Less deductions
80C (ELSS)	N/A	1,50,000
80CCD(2) employer’s NPS contribution	50,000	50,000
80D medical insurance	N/A	50,000
Less : Standard deduction	50,000	50,000
Professional Tax	N/A	2,400
Net taxable income	10,20,000	3,97,600
Income tax	63,000	7,880
Rebate u/s 87A	0	7,880
Net tax payable after surcharges	65,520	0

By choosing the right tax regime, Mr. Aditya can save Rs. 65,520

~add{num,4}

Report all your income

Income should be reported from various sources like rental income you pay via cash, or interest from saving accounts, etc.
We have to make sure these incomes are reflected in our ITR filing so we have to pre check it from sources.
Not doing so can lead to notices from the IT department.

~add{num,5}

Don’t miss the due date

Mr. Aditya should file his returns before the deadline of 31st July, if not he should pay Rs.5000 as late filing fees.
Also 1% interest on the outstanding tax amount for each month of delay.
For example, filing a month late will cost him Rs. 5560 extra (Rs. 5000 late fee + Rs. 560 interest on Rs. 56,020).

~add{num,6}

Don’t forget to cross-check your Form 16, AIS and Form 26AS

Mr. Aditya can find the mismatch between the pre-filled data in the ITR forms and the AIS which can occur due to differences in the information reported by various sources.

~add{2,blog_highlight-block}

Following things he can to do to resolve such mismatch:

He can review the data by comparing pre-filled ITR forms with AIS to identify differences.
Verify the sources of the differences from banks, employers, or other entities.
Gather supporting documents such as bank statements, Form 16, and interest certificates.
Correct the pre-filled data manually in the ITR form if errors are found.
Report differences in the AIS to the Income Tax Department via the e-filing portal.

Mismatches between Form 16, AIS, and Form 26AS can trigger income tax notices.

~add{num,7}

Don’t forget to do verification after filing the returns

Mr. Aditya has to verify his ITR after filing, either online or offline.

~add{2,blog_highlight-block}

Online (e-Verification)

Log in to your Income Tax e-filing account
Go to ‘e-file’ > ‘Income Tax Returns’ > ‘e-Verify Return,’
Verify using Aadhaar OTP, Net banking, etc.

~add{2,blog_highlight-block}

Offline

Print and mail the ITR-Verification form to the Income Tax Department.
If you do not verify your ITR within 30 days of filing it, the return will be considered invalid.
Once your return becomes invalid you should file it again with the late filing fees and interest penalty.