Five things you need to do before filing tax return
Are you going to submit your tax return by November 30 this year? Then it is better to know what important things you need to check before filing the tax return.
Let's discuss the five important things that need to be checked prior to lodging your tax return.
Taxable income is correct
Your tax calculation starts with taxable income and upon this figure, your tax liability is determined.
While calculating taxable income, you have the option to exclude the exemption up to a limit in certain areas. If you exclude less, your taxable income shall be higher resulting in more tax liability.
On the other hand, if you exclude more than the limit. it will create legal consequences in future for avoiding tax.
During filing a tax return, include the supporting documents for income that will help taxmen easily get an understanding of your taxable income
Now the question is: how will you be confident that your taxable income is correct and complete?
Collect all the information related to the source of income and based on that, calculate your taxable income. During filing a tax return, include the supporting documents for income that will help taxmen easily get an understanding of your taxable income.
Enjoy the full tax rebate
Tax rebate is the most important way to reduce your tax liability significantly which you have to claim on your investment allowance. If you have any investment or donation as per tax law, you are eligible to enjoy the tax rebate.
Make sure that you have considered the investment allowance limit and used the tax rebate rate to get your tax rebate amount. Now, exclude this amount from your tax liability that you have calculated on your taxable income. Be careful that you have got the maximum benefit as per your taxable income.
Deduct withholding tax
Exclude the tax you have already paid at source or as advance income tax, but you have to collect all the tax challan against your tax payment. Otherwise, it will not be considered to deduct from your tax liability. All the tax challans have to be attached with the tax return as supporting of the amount you have claimed.
Adjust prior year's excess tax payment
Sometimes you may have excess tax payments to the government in the prior year's tax files. This means you have paid more tax than your actual tax liability. In that case, you have the option to adjust during the current year's tax filing.
So, check your prior years' tax files, and if there is any excess payment, exclude the amount from your tax liability that will reduce your tax this year.
Show assets and liabilities as on June 30, 2022
This statement is not compulsory for all individual taxpayers. If certain conditions are met, it is mandatory. Otherwise, you can avoid it as it is complex to fill up.
First, check the last year's file and put the assets and liabilities amounts. If there is any increase or decrease, add or deduct where applicable. This is the easy way to complete the statement. Be careful you have not inflated your assets. Show as you actually have on June 30, 2022.
By doing the above things, you are ready to submit your tax return. Before that, make sure that you have preserved one set photocopy of the tax return. This will help you prepare your next tax return and respond to any tax notice if your tax file is selected for audit.
The author is lead consultant of Taxpert, an online tax training centre.