The first thing you need to do is to collect all the relevant documents (see table) and match them to avoid mismatch in information. Also many changes have been made in it ITR Form Requesting additional information. Take ITR 1 for example. The taxpayer has to give a detailed description of salary income – in terms of salary, benefits in lieu of salary, perquisites, exemptions, allowances and deductions. Archit Gupta, Founder and CEO, Clear, said, “The government has notified a new format of Form 16, wherein this detailed description of salary should be given by the employer.”
Those who haven’t submitted all tax-saving investment proofs to their employer will need to submit the relevant documents themselves to claim any tax breaks. It is also appropriate to match it with AIS (Annual Information Statement), said Yeshu Sehgal, head of tax markets, tax and consulting firm AKM Global.
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PF. interest on
The current assessment year will be the first time that taxpayers will be required to declare interest earned on contributions of more than 2.5 lakh in his provident fund (PF) account. This limit applies to contributions made by employees and not employers. This also includes contributions made to the Voluntary Provident Fund (VPF). contribution limit is 5 lakh for government employees.
The Employees’ Provident Fund Organization (EPFO) will maintain two separate accounts—non-taxable and taxable—for members who contribute more 2.5 lakh and calculate tax on interest earned onwards.
As per EPFO guidelines, Tax at Source (TDS) will be deducted at the rate of 10% on annual interest where PAN is linked to EPF accounts, while TDS will be 20% in case PAN is not linked. Taxpayers should note that EPFO will not deduct tax on interest earned if TDS amount is calculated 5,000, but it does not mean that the personal tax liability of the taxpayer is over.
Additional interest is to be reported under Income from other sources, and if TDS is not deducted, it will be added to the total income and taxed as per slab rates.
“Taxpayers can import details of interest and tax deducted amount from Form 16A issued by PF organization or their respective Form 26AS,” Gupta said.
capital gains
Taxpayers who have sold a building or land in the financial year 2021-22 will have to disclose all the information related to the sale from this year onwards. Saraswathi Kasturirangan, partner, Deloitte, said, “There is a capital gain from the sale of a house property and additional information is being sought to ensure transparency in computing the respective capital gains.”
Under the Long Term Capital Gains (LTCG) section in the ITR form, taxpayers will now have to mandatorily give the date of both sale and purchase of the asset. This is done because the LTCG from immovable property, which is triggered when the taxpayer holds the property for more than 24 years, qualifies for tax exemption if the profit is made under Section 54 (of residential property invested in residential property). sales proceeds), are invested in accordance with 54EC. (Proceeds of sale of residential property in Government specified bonds) and 54F (Proceeds of sale of non-residential property in residential property). Declaring the date of sale and purchase brings transparency as to whether the asset is a long-term capital asset and does not qualify for these tax breaks.
Any cost incurred for renovation or improvement of the home property sold is eligible for deduction from the sale price while computing capital gains. Such costs can be indexed to inflation. Taxpayers have to provide the original cost of rectification along with the cost indexed in the ITR form.
Also, if the house was renovated multiple times, year-wise details of all such improvement costs have to be provided.
Prabhakar KS, Founder CEO, Shree Tax Chambers said, “This rule is applicable only to residential properties and not on sale of commercial properties.”
reconciliation ais
The Annual Information Statement, introduced in November 2021, is a complete financial statement that includes information on all financial transactions of the taxpayer, including income from various sources, foreign exchange purchases, TDS and TCS, advances paid to the government or self- Assessment tax is included. Refunds initiated, details of financial transactions that capture high value transactions, etc.
It is important that taxpayers cross check all incomes reported in AIS with TDS certificate, interest income certificate and Form 26AS as any unreported income highlighted in AIS or mismatch will be scrutinized by the IT department.
If the taxpayer feels that any information in AIS is incorrect, they should give feedback to the IT department to rectify the error before filing ITR. Kasturirangan said, “It is advisable for the taxpayers to reconcile the investment and income details and file the tax return on the basis of actual numbers.”
Resolution of any dispute may take 1-2 weeks, so it is advised that you submit the response, if any, at the earliest to avoid lapse on the ITR filing deadline.