There are very hefty fines if you are not paying your income tax in the right manner. By filing these returns, a person declares how much income he/she has earned. Filing income tax return is not that simple, and sometimes individuals end up incorrectly filing the returns and later pay penalties according to the law. These points are essential to remember to ensure there’s no problem in terms of compliance.
- A person must file returns if the income exceeds the basic limit: Even if the tax is zero or all taxes are paid, the individual must file returns if the gross total income exceeds the basic limit. The minimum limit is ₹2,50,000 for general taxpayers, ₹3,00,000 for senior citizens (60-80) and ₹5,00,000 for very senior citizens (80+).
- A person must choose the right form for filing returns: The biggest problem a taxpayer faces is of which form to use while filing returns. Most of us fill ITR 1 because it’s simple, but the rules have changed. It is recommended that you should check between ITR 1, ITR 2, ITR 3, depending on your income sources to decide which form you should fill.
- A person must mention their Aadhar card number in tax returns: It is compulsory to mention your Aadhar number while filing tax returns. For tax returns, Aadhar is not optional anymore. If you overlook mentioning it, you will get a notice from the tax authorities for withholding information.
- A person must include interest and other income in their tax calculation: Almost 60% of the taxpayers are under the misunderstanding that interest form fixed deposits are tax-free but this is wrong. These deposits will help in saving taxes under section 80C (if kept for more than 5 years) but the interest is fully taxable.
- A person must calculate deductions that can be claimed: Most of the taxpayers are not aware of some expenses that are eligible deductions. But to find out how much to be claimed from which source is a hard thing. Often, it is important to claim only those deductions allowed by the law with supporting bills and receipts.
All the above points must be kept in mind while filing your tax returns to avoid any penalties or defaults.