Tax payment is an essential part of our life, and we cannot run away from it. So the government has now launched an e-filing platform that allows the easy filing of taxes right from the convenience of our homes. The portal can be accessed here. The platform’s main aim is to offer brilliant taxpayer services and speed up tax return processing. The government is even planning to develop a mobile application with all features to access the portal.
Our duty is to file the taxes on time; hence, accuracy and timely return filing are what we all aim for. You get a lot of content on tips to save tax, but here, let us focus on the key points you must keep in mind while filing an Income Tax Return (ITR) in 2021.
Choose an appropriate tax regime
A new tax regime has been introduced under budget 2020. It offers taxpayers an option to pay taxes at a lower rate. The decision is left to the taxpayers whether they want to pay as per the new regime. As per the new regime, one essential requirement to pay is that the taxpayer must not claim any exemptions. The alternative is most beneficial for salaried individuals as it allows them to plan their investment right from the financial year beginning. On the other hand, those who might have missed making any financial investment and have no deductions to claim from the gross income can even go for it now. Another good way to choose the most profitable tax regime for you is to calculate the tax before filing the return under both regimes and see which one comes less for you.
Understand ITR form changes
You must be aware that right at the start of any assessment year, the income tax department provides notifications about the ITR forms, wherein the relevant changes are highlighted. For instance, if we refer to the Form ITR-1 form used by the salaried individuals, single house property, and other source income, some exceptions. However, the form cannot be filed by those whose whole tax deducted at source (TDS) got deducted for a cash withdrawal as per section 194N. Additionally, ITR-1 is also not allowed for the employees with deferred taxes related to the employee stock options (ESOPs) allotted by a registered startup. Hence, it is crucial to understand the changes and keep them in mind before choosing the ITR form.
Verify pre-filled data, and report deductions not presented to your employer
As per the government norms, salaried employees must submit a declaration at the commencement of a financial year, showcasing all the tax-saving investments as well as deductions that they aim to make during the actual tax filing. Generally, a cut-off date is decided and declared to submit all the investment proofs. Moreover, if somehow you skip the cut-off date to deposit the investment proofs, you can always claim the applicable deductions during actual ITR filing. In the year 2021, the taxpayers can even avail the benefit by presenting information such as earned interest, mutual fund gains, and the dividends received. In order to keep the documentation in place and ensure timely proof submission, it is highly recommended to collect and refer to forms 16, 26AS, and bank statements before filing ITR.
Submit your expenses under the LTC cash voucher scheme
COVID-19 has badly affected the travel plans for all the Indians. Considering the pandemic situation, the government took up an initiative wherein the salaried employees could claim deductions under leave travel allowance. Tax redemption of up to Rs. 36,000 or one-third of the expenditure per person can be claimed for deduction. The spending includes money spent on buying goods with a GST rate of 12% or higher. Also, the purchase must have occurred between 12th October 2020 and 31st March 2021.
Practice timely tax filing to skip penalties
A tax complaint person aims to file the tax return before the due date. Crossing the deadline makes one subjected to specific penalties as per the Income Tax Act. One important point to keep in mind is that irrespective of due date extension, the taxpayers with a self-assessment tax liability of an amount higher than Rs. 1 Lakh are required to pay before 31st July 2021. Failing to make the payment by the said date can lead to interest charges under Sections 234A, 234B, and 234C.
As a responsible and obedient taxpayer, it is highly recommended to assess your taxable income as per the new norms. In addition, it is essential to verify all the underlying documents in advance. It is essential while computing the final tax payable and the applicable deductions/exemptions if any. Being prepared well in advance is a great way to file ITR properly with minimal chances of errors. Moreover, careful and informed decisions never attract any penal consequences and also keep the process smooth.
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