ITR Filing: 10 must-know things before filing income tax returns for FY 23–24

As tax season is officially here, the process for filing an income tax return (ITR) for the assessment year 2023–24 has begun, and the Income Tax (I-T) Department has opened its portal for individuals to submit their forms.

The process of filing an ITR  can be a bit complex and challenging. Below is a list of ten things that taxpayers must know and should pay attention to while filing their ITR.

1. Know the ITR deadline:

The first and foremost thing before filing an ITR that all taxpayers must note is that the last day for filing income tax returns is generally the 31st of July of every financial year. This year, the due date specified by the Income Tax Department to file income tax returns for FY 23–34 is Wednesday, July 31, 2024, for individuals (not subject to audit).

2. Understand your tax regime:

Another important step is choosing the tax regime. Taxpayers now have the option to opt between the old tax regime and the new tax regime, which was introduced in Budget 2020. Both regimes have their pros and cons. While the new regime offers lower tax rates but limits deductions and exemptions on certain things, the old regime has comparatively higher tax rates but allows people to save money by claiming deductions and tax benefits. Carefully evaluate which regime is more beneficial as per one’s situation.

3. Know which tax bracket or category you fall into:

Before filing an ITR, it’s crucial to familiarise yourself with the tax brackets and the concept of taxable income, which is the amount of income subject to tax after allowable expenses and deductions. Knowing your taxable income will help you determine your tax liability, which forms to fill out, claim eligible deductions, and plan your finances and investments accordingly, thereby ensuring filing ITR in an efficient and error-free way.

4. Check the documents required:

After knowing which tax bracket one falls into, the next important step is to collect all the relevant documents. The Income Tax Department requires taxpayers to submit various documents to substantiate their income, deductions, and tax payments. So, as the ITR filing process has become more streamlined and digitised today, organising and saving the required documents on one’s digital device makes the filing process faster and more accurate. 

5. Understand and select the correct ITR form:

The next step is to identify and choose the applicable ITR form based on one’s income sources and total income. In the first week of April this year, the Central Board of Direct Taxes (CBDT) made the ITR forms and Excel utilities available on the e-filing portal to encourage early return filing by taxpayers. Enlisted below are the kinds of forms and the requirements.

• ITR-1: For resident individuals, having the source of income from salary, one house property, and other sources (such as interest and dividends), with a total income of up to Rs 50 lakh.
• ITR-2: For individuals and Hindu Undivided Families (HUFs) with income sources from capital gains or foreign assets
• ITR-3: For individuals and HUFs with income sources from a proprietary business or profession.
• ITR-4: For individuals and HUFs with presumptive income from business or profession.

6. Verify personal and bank account details:

Before filing an ITR, taxpayers must verify their personal and bank account details to avoid delays in the tax refund process. Ensuring details, such as name, address, email, and PAN (Permanent Account Number), are linked and are accurately mentioned in your tax return.

7. Choose the correct assessment year (AY):

Ensure to mention the correct assessment year (AY) on the tax return, as providing the wrong AY can result in double taxation and unnecessary penalties. It’s important to note that this year, one will be filing taxes for the financial year 2023–24, meaning that the corresponding AY is 2024–25. 

8. Verify the details in Form 16:

Ensure in advance that the details in one’s Form 16, such as salary components, TDS deducted, and tax-saving investments, are correct. Cross-check the information with the pay slips and investment statements. Any discrepancies should be reported to your employer for correction.

9. Aggregate Income from Multiple Form 16s

If one has multiple employers during the financial year, make sure to aggregate the income from all your Form 16s before filing the return. This will help you claim the correct deductions and ensure that your total income is accurately reported.

10. Reconcile income with Form 26AS and AIS/TIS:

Thoroughly reconcile the total income with the information available in Form 26AS (Tax Credit Statement) and AIS/TIS (Annual Information Statement/Tax Information Statement), as it will help one identify any discrepancies and ensure that all the income sources are accurately reported.

Tip: If one has a complex tax situation, is filing for the first time, or is unsure about any aspect of their tax return, consider seeking the help of a qualified tax professional, such as a chartered accountant (CA) or a tax consultant, as they can guide through the process and help one maximise the tax savings.