As the financial year 2023-24 draws to a close, salaried individuals across India are gearing up for the annual ritual of filing their income tax returns (ITR). The Income Tax Department has released the ITR forms, and the countdown to the deadline—31st July 2024—for non-audit cases has begun. However, the process isn’t as straightforward as the calendar suggests, especially for those reliant on Form 16 from their employers.
Understanding the Role of Form 16 and TDS
Form 16 is a pivotal document issued by employers to their employees, summarizing their income and the taxes deducted at source (TDS) throughout the financial year. It details components of salary such as basic salary, allowances, bonuses, and deductions under Chapter VI-A. For salaried individuals, Form 16 is indispensable as it serves as a basis for filing accurate ITR.
In practice, employers are mandated to deduct TDS from employees’ salaries every month and deposit it with the government by the due date of 30th April. Subsequently, the employers are required to file TDS returns by 31st May, which outlines the total TDS deductions made for their employees. This process ensures that the Income Tax Department has a record of the taxes deducted against each PAN (Permanent Account Number).
Challenges Faced by Salaried Employees
Despite the systematic withholding of TDS by employers, salaried employees often face a lag between the end of the financial year and the receipt of Form 16. Employers typically generate and distribute Form 16 by mid to late June, leaving employees with a relatively short window to compile their income details and prepare for filing their ITR by the July 31st deadline.
This delay can be attributed to various factors such as the complexity of payroll processing, reconciliation of accounts, and ensuring compliance with tax regulations. Additionally, employees with income from sources other than salary—such as income from shares, mutual funds, interest from fixed deposits, savings bank accounts, etc.—must gather these details meticulously to accurately report their total income in the ITR.
Declaring Assets and Liabilities for High-Income Taxpayers
A significant aspect that high-income taxpayers (those earning more than Rs. 50 lakhs annually) need to consider is the declaration of assets and liabilities. The Income Tax Department mandates that individuals falling under this bracket must disclose their assets and liabilities as part of their ITR filing. This requirement aims to enhance transparency and prevent tax evasion among high-net-worth individuals.
Steps to Prepare for ITR Filing
To streamline the process of filing ITR for FY 2023-24, salaried individuals should take the following steps:
1. Collect Form 16 and Verify Details
Upon receiving Form 16 from their employers, employees should verify the accuracy of details such as income earned, TDS deducted, deductions claimed under Section 80C to 80U, and other relevant information.
2. Compile Income Details from Other Sources
Gather details of income from sources other than salary, including interest income from savings accounts, fixed deposits, dividends from investments, rental income, etc. Ensure all income is accurately reported in the appropriate sections of the ITR form.
3. Utilize Form 26AS for Verification
Form 26AS is a consolidated statement that provides details of TDS deducted against your PAN. Verify Form 26AS to ensure that all TDS deductions made by employers and other deductors are correctly credited to your PAN. Any discrepancies should be rectified before filing ITR.
4. Calculate Taxable Income and Tax Liability
Use the information gathered to calculate your total taxable income after deducting eligible deductions under various sections of the Income Tax Act. Compute your tax liability based on the applicable income tax slabs and rates for FY 2023-24.
5. Choose Between Old and New Tax Regime
Evaluate the benefits of the old and new tax regimes for FY 2023-24 and choose the one that optimizes your tax liability. The new tax regime offers lower tax rates but without deductions and exemptions available in the old regime.
6. Declare Assets and Liabilities (If Applicable)
High-income taxpayers must declare their assets and liabilities in the specified format as part of their ITR filing. This includes details such as immovable properties, movable assets, loans taken, etc.
7. File ITR Online
Use the Income Tax Department’s e-filing portal to file your ITR online. Select the appropriate ITR form based on your income sources and taxpayer category. Ensure all details are accurately filled and verified before submission.
8. Verify ITR
After filing ITR online, verify it using any of the electronic verification methods such as Aadhaar OTP, Net Banking, or EVC (Electronic Verification Code). Verification completes the filing process and initiates processing by the Income Tax Department.
9. Pay Advance Tax (If Applicable)
If your total tax liability after TDS exceeds Rs. 10,000 in a financial year, ensure timely payment of advance tax in quarterly installments to avoid interest and penalties. Advance tax payments can be made online through the designated bank channels.
10. Retain Documents for Future Reference
Maintain copies of all documents related to income, deductions, investments, and tax payments for future reference. These documents may be required for scrutiny assessment by the Income Tax Department.
Conclusion
Filing income tax returns for FY 2023-24 is a crucial financial responsibility for salaried individuals in India. Despite the challenges posed by the delay in receiving Form 16, careful preparation and adherence to tax regulations can facilitate a smooth and accurate filing process. By understanding the nuances of income tax filing, utilizing digital platforms for e-filing, and ensuring compliance with disclosure requirements, taxpayers can effectively meet their obligations and contribute to a transparent tax regime. As the deadline approaches, diligent preparation and timely action are key to achieving a hassle-free ITR filing experience.
Disclaimer: The content provided on this blog or website is for informational purposes only. It is not intended to be, and should not be construed as, advice or recommendations of any kind. Always seek the advice of a qualified professional with any questions you may have regarding your specific situation. The information presented here is based on our personal opinions and experiences and should not be relied upon for making any decisions.
