Invest in Credit Risk Mutual Fund or not?

The deadline for tax filing for salaried individuals is fast approaching. The government has set September 30, 2021 as the last day of filing an income tax return (ITR) for the Financial Year (FY) 2020-21. The deadline was extended from July 31 owing to the ongoing Covid-19 pandemic. This time the income tax department launched a new e-filing portal (www.incometax.gov.in) to help ITR filing taxpayers to speed up the processing of returns if any.

Here are a few things to keep in mind regarding tax filing.

Do not procrastinate

There are murmurs that the last day of tax filing may be extended further due to the glitches in the tax filing portal. The government has given time to the vendor, Infosys, until September 15 to get things rectified. However, an extension is generally announced closer to the last filing day. So it is better not to take chances and file your tax early. It will help to have peace of mind by avoiding penalties and would also help in getting your refund, if any, processed early. “Salaried taxpayers should not wait for delay till the last day. Pay your tax and file ITR as soon as possible to avoid interest and penalties,” Sudhir Kaushik, Co-founder and CEO, TaxSpanner.com said.

Use the correct form

The IT department has different forms for different categories of tax payers. Before filling the ITR form, check the correct form applicable to your class of tax assesses. You can access the pre-filled data from the tax e-filing portal which generally includes personal details, salary, dividend, and interest income.

Choose your preferred tax regime

In the budget 2020, the government had introduced a new concessional tax regime which is optional for you. You have the option to choose between the new or old regime. The new rule provides you with a lower tax slab rate, but you will have to sacrifice most of the deductions, rebates, and exemptions available under the old regime. The employer generally gives you an option at the beginning of the year to choose the tax regime.

Claim all deductions

Salaried employees are generally reminded by their employers about the deadline to submit the proof regarding investments made to claim deduction under Section 80C of the IT Act. However, many might not have been able to submit the proof in time to the company. If you have an additional deduction to claim, do not forget to claim it while filing returns. “Do not forget to claim an additional deduction if you forgot to submit the proof with your employer,” Kaushik advises.

Keep documents handy

Once you are ready to file your ITR, you should organize all the relevant information and documents required for filling the ITR form. This will help avoid any misreporting or incorrect reporting of income. Also, make sure that all sources of income, including the exempt income such as HRA, EPF, and PPF, is appropriately reported in the tax return form. If you are a salaried individual, you should reconcile all sources of income written in Form 16, Form 26AS.