Tips for Filing RTI: How to Prepare for Filing the Income Tax Return (RTI) for YY 2021-2022
RTI filing tips for fiscal year 2020-21 (AY 2021-2022): The deadline for filing the income tax return for individual employees or traders has been further extended to December 31, 2021. After registering on the electronic filing portal, taxpayers must carry out preparatory work before filing the income tax return. Here is a guide to preparing your tax return.
Find out which RTI form is applicable
First, assess your sources of income to find out which RTI form is applicable. Selecting the correct ITR forms is essential for taxpayers. The taxpayer should choose the form according to the type of income source and category.
The government has specified seven RTI forms for the 2020-21 fiscal year. ITR forms ITR-1, ITR-2, ITR-3 and ITR-4 are applicable for individuals. If the RTI forms are not selected correctly, you may need to re-file the RTI upon notice from the income tax department. Various online RTI filing platforms automatically detect which RTI is right for you and it is best to trust it.
Collect and assemble documents related to various sources of income
The Income Tax Act classifies sources of income into five categories: salary, real estate, business and occupation, capital gains, and other sources. To know all of your income sources, you need to collect and collate data to consolidate all income sources. For example, you can collect a bank statement, interest certificates, capital gains reports from the broker, Form 26AS, and Form 16 / 16A.
Form 16 is a TDS certificate issued by the employer to the employee each year. It contains a summary of the salary paid to the employee and the TDS deducted therefrom. Likewise, Form 16A is issued by deductors for TDS deducted on non-wage income. For example, TDS deducted from interest income, rent receipts, professional receipts, etc.
Taxpayers can see the consolidated view of TDS deducted by all deductors in Form 26AS. Taxpayers can download Form 26AS from the Income Tax Portal.
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Avoid errors when reporting income or deductions in the ITR
After collecting all the information, roughly summarize your financial information, such as professional receipts received, rent received, dividend, capital gain / loss, salary, savings interest, etc. Likewise, you can collect all the information about the investments made during the year for tax saving purposes. With this practice, you can avoid the underreporting of income and the underclaiming of deductions.
Check Form 26AS carefully
The income tax department considers the information according to Form 26AS. In addition to the details of the TDS deducted by the deductor, the income credited or paid is also mentioned in Form 26AS. You can find all the income details on Form 26AS for the relevant fiscal year on which TDS is deducted. For example, salary income, interest from bank deposits, dividend income, the value of real estate sold during the year, etc. is displayed in Form 26AS. In addition to the income on which TDS is deducted, Form 26AS also shows any high value transactions you entered during the year.
Therefore, the taxpayer should prudently include all income in the tax return. Also check the income details and TDS amount in Form 26AS. If there is a mismatch between Forms 16 / 16A and 26AS and you are reporting income lower than the income mentioned in Form 26AS in the income tax return, the Income Tax Service may issue a nondisclosure notice. revenues. It is also necessary to verify if the entries of form 26AS belong to them. Therefore, it becomes imperative to reconcile your income according to form 16 / 16A and form 26AS.
When filing your return, you have the option to pre-declare certain income such as salary, dividends, capital gains and other data from Form 26AS. However, you must verify the information and add data not entered in the income tax return.
Calculate income tax under the new or old tax system
From fiscal year 2020-21, individuals and HUFs can choose between the new and the old tax regimes. The new tax system offers favorable tax rates. While in the current tax regime, the taxpayer can benefit from various exemptions and deductions. Individuals opting for a new tax regime for the 2020-21 fiscal year should not forget to complete Form 10IE. Form 10IE is a declaration to be filed by the taxpayer in order to adhere or not to the new tax regime. Taxpayers can submit said form electronically through the Electronic Income Tax Reporting Portal. It must be provided before filing the tax return for the tax year concerned.
Determine the income tax payable according to the tax regime (old or new) that is advantageous to you.
Pay income tax before filing the income tax return
After calculating the income tax payable, the taxpayer must deduct the prepaid taxes from the total income tax payable to calculate the net tax payable. Income tax must be paid before filing the income tax return. It is important to note that if the tax payable for the self-assessment is more than Rs 1 lakh for the 2020-21 fiscal year, the due date for paying the tax was July 31, 2021, even though the due date for filing the declaration is extended until December 31, 2021. Therefore, any taxpayer who does not pay tax on self-assessment (where the liability is greater than Rs 1 lakh) before July 31, 2021, must pay interest of 1% per month or part of the month calculated from the day after July 31, 2021 to the effective date of payment of the tax.
All of this is necessary to file the income tax return. Once you are done with all of the basic requirements above, all you need to do is declare all the information in the income tax return and submit it to the income tax department.
(By Archit Gupta, Founder and CEO, Clear)