Essentials for filing Income Tax Returns

The due date for filing the non-tax audit returns for the Assessment Year (AY) 2022-23 will be July 31, 2022. All the new returns and their utilities are well in place.

Assessment Year means the twelve months period starting from 1st April and ending on 31st March of the year following the year for which the return is being filed. Income earned in a year is taxable in the next year. The year in which income is earned is known as the Previous Year (PY) and the year in which that income is assessed for tax purposes is Assessment Year.

In the current case, the Previous Year (PY) is from April 1, 2021, to March 31, 2022, while the Assessment Year (AY) will be from April 1, 2022, to March 31, 2023. The Income Tax Department’s new e-filing portal with reports namely Taxpayer Information Summary (TIS), Annual Information Statement (AIS) and Form 26AS have made the filing of ‘Return of Income’ easier. In addition, there are documents one must have handy before proceeding to file. Let us have a look at the few most important documents.

Form 16/16A/16B/16C

In the case of a salaried person, Form 16 is the foremost important document required for filing his or her Return. It is a form of tax-deducted at source (TDS) certificate issued to an employee by his employer providing the details of salary paid, taxes deducted and deposited with the government during the previous year. An employer is mandated to issue the said certificate to all employees on or before 15th June of the following year.

In case of sale of immovable property sold worth Rs 50 lakh or more during the previous year 2021-22, the buyer or purchaser is obligated to deduct applicable tax, remit it to the Government and issue a Form 16B to the seller within 15 days from the due date of furnishing Form 26QB.

The last form in the series is Form 16C, which is for those paying monthly rent of Rs 50,000 or more. They, too, are required to deduct such applicable tax, remit it to the Government and issue Form 16C to the landlord of the given property within 15 days from the due date of furnishing Form No. 26QC. All the aforesaid Form 16s are accessible post-login on the Department’s TRACES portal subject to remittance and filing of the relevant returns by the concerned.

Interest income certificates

Generally, banks, post offices and other financial institutions will issue interest income and interest certificates to their depositors. These will be immensely helpful to enter one’s interest income details accurately in their return and also claim tax deductions up to Rs 10,000 under Section 80TTA. However, this is allowed only for interest earned on a savings account. In the case of the non-availability of such certificates, one should check his or her updated Bank pass book/s entries for the same.

Specified tax-saving instruments

To claim such deduction for investing in tax-saving instruments, a taxpayer is required to submit all such necessary proofs collected from the concerned. Generally, salaried employees are asked to submit their investment and expenditure proofs to their employers well before the end of the relevant financial year to take a call on whether to deduct higher tax under the old regime or not deduct the applicable taxes. If submitted, the same will be reflected in one’s aforementioned Form 16 and also the system will prefill them in their yet-to-file draft return. If one failed to submit them, the same can be claimed at the time of filing his return. Thus, proof of investment and expenditure is a must.

Capital Gains from sale of assets

Capital gains are taxable when they arise due to the sale of property, shares, and mutual funds. To compute capital gains – short term or long term - earned from the sale of property, land and building or immovable property, one should have its sale deed, purchase deed and details of cost of improvements handy. AY 2022-23 onwards, one should provide certain additional inputs such as the date of purchase and sale of land/building, year in which money was spent on its improvement, cost of acquisition and indexed cost of acquisition. Also, if the property sold is situated outside India, then buyer details are required to be reported in their return. Additionally, gains earned from cryptocurrency transactions during the PY 2021-22 also are required to be reported from now on.

Investments in unlisted shares

Those who were holding unlisted shares during the previous year 2021-22 are obligated to report them in their returns. Details required to file the return include: name, type and PAN of the company, opening balance as of April 1, 2021, cost of acquisition, unlisted shares acquired during the year with the date of purchase, the face value of shares, issue price per share in the case of fresh issue, the purchase price per share, unlisted shares sold during the year and the amount received therefrom, cost of acquisition and closing balance as on March 31, 2022.

Annual Information Statement

The I-T Department has rolled out a new Annual Information Statement (AIS) to provide a comprehensive statement to a taxpayer containing his various financial transactions related inputs carried by him during a financial year, gathered from various sources at the back-end. The Department has also given a facility to capture the assessee’s feedback and an opportunity to rectify it before proceeding to file their return.

Concluding remarks

With barely 45 days left, it is time to sit, take a note of ‘New Returns’, and reconcile with AIS, TIS, & Form 26AS.

Though filing Income Returns is becoming easier day by day, it is advisable to avail a tax professional’s advice on critical aspects, if the situation warrants it.

(The writer is the Founder and CEO of Shree Tax Chambers)