A tax assesses has to undergo a series of formalities, filling and filing of Income Tax Return or ITR is one of them. The Income Tax Act of 1961 and Income Tax Rules of 1962 mandates every citizen of India to file their ITR at the end of every fiscal year.
It has to be filed with the Income Tax Department of India before the due dates as prescribed by the Government of India (GOI). Along with, being cautious about the deadline, there are plenty more other things as well which should be taken care of while filing an ITR.
Some of the challenges are highlighted here which needs your helpfulness to be triumphantly combated. If considered well, there are minimum chances of getting mistaken and penalized:
Correct ITR Form to be Filed
Income Tax Department holds the responsibility to issue ITR forms but the responsibility to choose correct ITR among the seven lies with an assessee. Which ITR has to be filed depends on the nature and source of your income.
For example, filing SAHAJ Form ITR 1 is to be filled by Resident Indian individuals and Hindu Undivided families (HUFs) when their income from salary/ pension, house property and other sources is below INR 50 lakhs, and they do not have any capital gains.
Similarly, Form ITR2 is relevant for Individuals and HUFs when their income from salary, pension, house property or other sources is above INR 50 lakhs, or in cases of foreign income or when there is an income from capital gains during that fiscal year.
Form ITR2 is appropriate even for those non-resident individuals who are earning salary income from abroad. However, ITR2 can not be filed by the taxpayers who are earning income from business or profession cannot use this form.
How to Deal with This Challenge?
An assesses should well consider the type and source of his income and then select the appropriate one among the numerous forms issued by the tax department. The changes in Forms notified by the Income Tax Department every year should also be thought-through by an assesses. An assesses can outsource this responsibility of e-filing an income tax return to the third party like … which caters such professional services.
Verify Your Taxable Income
Taxable income is the individual’s total income of a particular fiscal year on which tax should be levied. It is the total of wages, salaries, bonuses, tips, interest income, rental income, dividends/ investment income, and profits from the sale of house property, shares or gold and that is why it is also referred as gross income or adjusted gross income or gross income.
It is not easy for an individual to take care of every aspect of the Taxable Income, there is a higher possibility of missing one or the other inclusion of this income.
How to Deal with This Challenge?
Download Form 26AS from the official website of the Income Tax department. Form 26AS is a precise reflection of the total income received and the amount of tax deducted on it.
In addition to this, this form notifies you about the exempted income at the time of ITR filing. Form 26AS brings down the chances of receiving a demand notice from the income tax department, to the minimum as it also provides absolute details about Tax Deducted at Source (TDS), Tax Collected from Sources (TCS), Refunds, Advance Tax, High-Value Transactions such as the sale of shares or mutual funds.
Consider and Calculate All the Deductions
Income-tax Act, 1961 provides deductions to the assessee through which a considerable amount of tax can be saved. Section 80C allows a deduction up to INR 1.5 lakh from your income of a Fiscal Year when the investment from the income is done in Public Provident Fund (PPF), Life Insurance Premium, Employee Provident Fund (EPF), National Pension Scheme (NPS), Equity-linked saving schemes (ELSS).
Deductions are available on opting for National Saving Certificates (NSC) or Tax Saving Mutual Funds also. Apart from these deductions, many other deductions are also available which allows taxpayers to save his hard-earned pockets.
How to Deal with This Challenge?
- An assesses should keep the above mentioned legal expenses which can be claimed as a deduction in his mind, mobile or laptop.
- An assesses must know the following points:
- Deduction for the tuition fee paid to the school/college/university for the full-time course of a maximum of two children can also be claimed.
- Repayment of the principal amount of a home loan can be availed as tax deduction u/s 80C.
- Contributions made for medical insurance for self, spouse and dependent children can be availed as tax deduction u/s 80D up to the maximum limit of INR 25,000.
- An additional deduction of INR 50,000 for parents of age more than 60 years when invested in insurance premium.
Multiple Filling of Form 16s
When the Form 16S is filed for multiple times, it elevates the level of complexity while adding bewilderment in the ITR 1 Filing process. Generally, this challenge crops up when the multiple jobs have been swapped during a particular Fiscal Year or when the investment has been done in different tax-saving schemes.
How to Deal with This Challenge?
The best way to overcome this challenge is to resolve all the issues which are associated with Form 16 with your current employers while bearing in mind the previous employer when the multiple filing is due to the switching around the jobs.
Ensuring the Correct Filing of TDS in ITR
This is another big challenge which appears at the time of filing an ITR. Correct Filing of TDS in ITR in compliance with the terms and conditions of Form 26A and Form 16A / 16 is must. The disparity in 26AS – a tax credit statement, leads to adverse consequences to be faced while filing an ITR.
How to Deal with This Challenge?
- An assessee should note that TDS (Tax Deducted at Source) is deducted not only from your salary but from other squads of payments as well. Example of such payments includes income from interest on fixed deposits, income from rent when the monthly rent goes higher than INR 50,000.
- An assessee should make sure that the deductions are duly reflected in Form 26AS.
Difficulty in Availing HRA Tax Exemptions
Availing HRA Tax Exemptions can be another challenge for you if you are accommodating in a house taken on rent. Section 80 GG of the Income Tax Act, 1961 allows a taxpayer to claim a deduction for payment of rent. HRA Tax exemption can be claimed by an assessee even if it is not a part of his salary structure.
How to Deal with This Challenge?
- Duly calculate HRA exemptions before e-filing an ITR. HRA exemptions can be calculated accurately with the help of HRA calculators which are available online.
- HRA calculators let you confirm the amount of exemption which can be availed on the rent paid by you.
- On-time submission of documents is another solution for availing House Rent Allowance (HRA). An assessee must submit the rent receipt and rental agreement to the employer to avail the HRA benefits.
- Make sure to submit the PAN (Permanent Account Number) of your landlord to your employer if the monthly rent is more than INR 1,00,000.
Submission of Sufficient Tax Proofs to Employer
Submission of sufficient Tax Proofs to Employer is very important and necessary if you want to take the benefits such as exemptions and allowances available on your salary income. An assesses has to relinquish these benefits if he hasn’t submitted enough and important tax evidence to the employer.
How to Deal with This Challenge?
An assesses must ensure that all the tax-saving schemes and investment-related savings documents are duly submitted along with tax declaration to the employer. Additionally, an assesses must take to furnish correct personal information such as name, address and PAN and should match the tax deductions of Form 16 and Form 26AS. This empowers a taxpayer to claim the tax deductions easily and promptly while e-filing an ITR.
On-Time Payment of Advance Tax
Advance tax is referred to as “pay as you earn tax” also and has to be paid every quarter. This is also a big challenge as it has to be paid by everyone, regardless of whether you are a salaried individual, a freelancer or a businessman. The advance tax is exempted only for senior citizens who are 60 years or above age, and do not earn from business or profession, are exempted from paying this tax.
An assesses gets penalized if he doesn’t pay the advance taxes on time i.e. the on the dates allotted by the government of India.
How to Deal with This Challenge?
An assesses should keep the following points in his mind:
- Advance Tax has to be paid to the Income Tax department if the total tax liability (including the TDS) during a fiscal year is INR 10,000 or more. The same applies to NRIs.
- Advance tax can be paid in quarters instead of paying the whole amount at the end of the year. It can be paid in easy installments on the dates fixed by the IT department.
- The initial liability of 15% has to be discharged by June 15, 2nd installment of 45% (minus advance tax which is already paid) has to be cleared off on or before September 15, third installment of 75% ((minus advance tax which is already paid) has to be settled down by December 15 and the last & the 4th installment needs to be paid on or before March 15. In this way, the whole 100% of advance tax will be cleared off.
Last Moment Verification of ITR Just Before The Final Submission
Last moment/minute verification of ITR may lead to errors and mistakes which may further lead to delayed processing, penalty or need to file the Form again.
How to Deal with This Challenge?
Ensure to check the major and minute details of ITR many times before finally submitting it to the income tax department.
Not Able to Remember Password
Nowadays, there is a higher possibility of forgetting the password as we are highly dependent on mobiles and laptops for saving information such as mobile numbers and addresses. Moreover, the e-filing is done only once in a year so forgetting passwords is quite obvious.
How to Deal with This Challenge?
An assesses should keep his e-filing User ID and password on his tips or by writing it somewhere which is easily accessible and safe, even if he avails C.A. services for return filing. In addition to this, secret questions put forth at the time of logging must be written or remembered for future use. Accessing the account in free time can be another tip which will enable the taxpayer to remember his Login Id & Password.
Well, a list of challenges is before you along with the solutions and ways to combat them. However, these challenges demand your time and attention. So, some people may find it troublesome and baffling to keep such a big bunch of information in their mind while focusing on their core job. It germinates a demand for an all-inclusive solution or like Filing ITR Via Gen IT Software that can take care of every minute details, comply with government rules and regulations and automate the filing process while ensuring promptness and error lessness.
