ITR Filing: How to choose the right form to file income tax return? Avoid these common mistakes

Income Tax Return Filing : The time to file income tax returns has arrived. Most salaried people will be waiting for Form 16 from their employer, which they will start receiving soon. Most Employers start issuing Form-16 after June 15. With this, the way will be cleared for the salaried employees who pay tax to start the process of filing Income Tax Returns. The last date for filing income tax returns is 31 July. But at the last moment, many times problems are faced due to heavy traffic on the portal of the Income Tax Department. Therefore, to avoid such problems, it is better not to wait till the last moment to file ITR.

First of all, gather the necessary documents

As soon as you receive Form 16 from your employer, you should gather and organize all the documents required to file your income tax return. Apart from this, you should also match the details of your Form 26AS and Annual Information Statement (AIS). After all these tasks are completed, you can start the process of filing your return (ITR Filing).

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How to choose the right ITR form

The next step after collecting all the documents required to file income tax return You have to choose the right ITR form. Salaried taxpayers have to choose either ITR-1 or ITR-2. The first form is a simple form which can be used only by resident Indians and ordinarily resident Indians whose annual income is less than Rs 50 lakh. This includes income from salary or pension, one house property, agricultural income up to Rs 5,000 and interest received on savings or fixed deposits, dividends and income from family pension.

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Other salaried employees, people who do not have income from business or profession to show – will have to use ITR-2. For example, if you are a resident but not ordinarily resident (RNOR) or a non-resident individual or you have to show capital gain or capital loss, are a director in a company or you have unlisted shares or employee stock option (ESOP), or you hold a foreign bank account or any other asset outside India, then you will have to use ITR-2 instead of ITR-1.

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Why is it important to use the correct form?

If you do not use the correct form, you may miss out on providing the required information. For example, if you have earned capital gains but file your return using ITR-1 instead of ITR-2, you may receive a notice from the Income Tax Department for not providing complete information or hiding it. Your return may also be declared defective due to selecting the wrong form.

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Things to keep in mind before filing return

If your employer has calculated your tax under the new tax regime and you want to switch to the old tax regime and claim tax deduction, you may face inquiries from the Income Tax Department due to mis-match in Form 16 and ITR returns. But if you have complete documentary evidence, you can save tax by answering them. But if you do not have sufficient documentary evidence to support your tax deduction claim, you should not claim deduction while filing your return.