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Hello and welcome to Simply Save, Money

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Control's weekly personal finance podcast

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where we discuss all things money.

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I'm your host, Preeti Kulkarni, and in this

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episode, we'll turn our attention to the all-important

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annual ritual that most of us do

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not look forward to, that is filing

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income tax returns. This is because

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it is indeed a tedious process and has

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remained a cumbersome exercise despite

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extensive digital transformation

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that it has undergone over the years. However,

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the fact is

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that an early start and a meticulous approach

0:35

to filing returns can actually ensure

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smooth sailing. To know more about

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how you can minimize the return filing hassles,

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we have with us today Aarti Raute, partner

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with Deloitte India. Hello Ms. Raute,

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welcome to the show. It's great to have

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you on Simply Save at a time when many taxpayers

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will be filing their income tax returns for

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the financial year 2022-23 or

0:56

assessment year 2023-24. A

0:59

pleasure to talk to you always, Preeti. Before

1:01

commencing the process of

1:03

filing income tax returns, what

1:05

are the documents that taxpayers should have in

1:07

place? What are the preparations that they should have

1:09

in place before they start? So

1:12

you actually used the right word, Preeti.

1:15

Preparation is the key word because

1:17

a lot of people believe that,

1:21

you know, I've done this for the last so many years

1:23

and I'm familiar, but

1:26

it's always good to prepare

1:28

for the tax filing season. And

1:32

the first

1:33

and foremost, please don't leave it till the last

1:35

minute. Please start off early because

1:38

each year the tax department

1:40

does a lot of enhancements. They

1:42

do some tweaks and changes and

1:45

you wouldn't like to be caught on

1:47

the wrong foot at the last minute. So just

1:50

be a little careful then. In

1:54

terms of what could be the preparation,

1:58

before starting the process, you have to have have

2:00

to understand or you have to know what

2:03

is it that

2:04

you've earned during the year.

2:06

Honestly, it appears to

2:08

be quite simple.

2:11

You'll obviously know the income that you've earned,

2:14

but it's not that easy because there will

2:16

be a lot of passive income which you

2:18

might not keep a tab of. Like

2:20

for example, bank statements, bank

2:22

interest, bond interest, any

2:26

kind

2:26

of sale

2:28

and purchase transactions with

2:30

which your brokerage form

2:32

would have taken care of. These

2:34

are some of the things that you'll have to take care of. So please

2:37

start off thinking about each

2:39

of your source of income. For example,

2:42

if you're a salary person, you will have your form 16,

2:45

you will have your bank statement,

2:48

you will have your 26 AS, which is

2:51

a summary of all the taxes and the income

2:54

earned by you. The

2:56

AIS statement will be there, so you please collect

2:58

that. You should collect all

3:01

capital gains statements from your brokers to

3:03

understand whether there is

3:05

any tax payable on those.

3:08

If you have had a unique

3:10

transaction during the year, for example, like a sale

3:13

of purchase of property,

3:14

you

3:16

need to make sure that you have all

3:18

the necessary details in place, rental

3:21

income of course. So basically,

3:24

each and every source of income just

3:27

gets down to the granular details

3:29

and collect those.

3:32

At times, people actually start off

3:35

with getting the bank

3:37

statements or requesting for bank statements,

3:40

filling up their past books, updating them.

3:42

Those might also be necessary.

3:45

Right. Okay. And you mentioned

3:48

form 16 and form 26 AS. So

3:50

could you highlight the key details in these forms, form 16,

3:53

26 AS and AS, that they should

3:55

keep an eye on, that taxpayers should

3:58

keep an eye on? So basically...

5:59

The AIS is actually a

6:02

statement of all financial

6:04

transactions, whether taxes are withheld

6:06

or not. So,

6:10

you know, it has investments, sale of script,

6:12

even bank interest is reported. So

6:15

it's kind of an all comprehensive statement.

6:17

So that has to be looked

6:20

at and carefully seen.

6:25

Something which is noticed quite

6:27

often on the AIS statement is

6:30

that since it is fairly new,

6:32

there are some times

6:36

and encouraged reporting. So there could be incomes that

6:38

are missed or there are

6:40

additional income reported which are not really

6:43

of the taxpayer. So the

6:45

taxpayer has to look at the details on

6:47

hand that they have and

6:50

report the income correctly

6:52

in the tax return. The AIS can

6:54

be used as a reference but not as the

6:57

sole

6:57

source

6:59

of truth over there. And

7:02

they need to have that corrected. So

7:05

if you could move to the process

7:07

of selecting the right firm, how should

7:09

a salary taxpayer in particular

7:11

go about picking the right firm? And

7:14

what are the factors that she should keep in mind?

7:16

So for a salary taxpayer,

7:19

I think generally they would go for an

7:21

ITR 1 or an ITR 2. So

7:24

first is your level of income. If

7:26

you have your total income

7:29

limited to less than 50 lakhs

7:31

or so, you should use

7:33

ITR 1.

7:35

If it is more than 50 lakhs, you would do ITR 2. The

7:38

ITR 1

7:39

also

7:40

restricts the reporting to one

7:42

house property only, right?

7:46

It has income from other sources but

7:48

it excludes winnings from lotteries

7:50

or resources.

7:53

So if you have any

7:55

sources of income like that or

7:57

maybe capital gains, then you have to switch

7:59

to the next one. to ITR 2.

8:02

Long residence or a resident but not

8:05

ordinary resident should

8:07

definitely use an

8:10

ITR 2. Again, if you have

8:13

traveled overseas

8:13

or you have

8:17

any

8:18

foreign assets, let's say you were on

8:20

an assignment overseas, you have a bank

8:22

account overseas, which may not

8:24

be so significant but you still have it, then

8:26

in that case you should report an

8:29

ITR 2. So, the

8:31

rules for reporting income

8:33

in specific ITRs is provided in

8:35

detail and one has to be very

8:37

careful while selecting the ITR and

8:40

otherwise you will either miss out

8:42

on that income or you will kind

8:45

of have to redo it. Alright,

8:47

alright. And any important changes

8:50

in ITR forms that they should be aware

8:52

of this year? So, not really.

8:56

There are no significant changes because

8:59

I think a lot has been done

9:01

in the previous years itself. So,

9:04

not really anything that

9:06

you

9:06

will really

9:08

be worried about. Minor tweaks

9:10

here and there are then but not

9:12

really major. And

9:15

could you also talk about ITR 3

9:17

and ITR 4 that are not

9:19

necessarily applicable to salary taxpayers.

9:23

If you could start with which category of taxpayers

9:25

have these forms applicable to?

9:27

So, ITR 3

9:31

very specifically deals

9:34

with people

9:37

who have income from

9:39

business and profession. So,

9:44

you should have individuals

9:47

and HULs having income from business

9:49

and profession meet to file

9:52

ITR 3. Other sources

9:54

of income could be there. So, they could have

9:56

salary income, they could have dental income, all

9:58

kinds of income. major leave

10:00

you see it as i get free

10:02

fall or person

10:04

who has got are a

10:06

source of income from it's okay

10:08

hand oh idea for

10:11

his speech he can be for

10:13

your own you know partnerships

10:15

phone so other than drifted into do so

10:17

that your partnership for so oh

10:19

people who are i'm

10:22

going under presumptive taxation

10:24

which

10:25

is like you are applying a very specific

10:28

could eat

10:28

half home of or

10:30

to the domain your income and not necessarily

10:34

in all on maintaining

10:36

books of a gun dose people would have

10:38

to fight and idea for

10:40

okay

10:43

and finally whatever mistakes

10:45

that you've seen people typically made during

10:47

defeated and what can

10:49

they do to ensure that defend

10:51

diet exercise a smoke it is

10:53

generally as your to be a very tedious the seizure

10:56

and it is cumbersome but any

10:58

anything that they can do to ensure that if this

11:00

more than any mistakes that they can a white so

11:03

one of the things oh which

11:05

which happens is that people really

11:08

start late can lead us

11:10

to the process and which

11:12

is why that lots of things which miss

11:14

the attention they don't own a

11:16

lot basically given i do

11:18

they do earlier

11:21

probably such things i mean my knowledge

11:23

of illnesses voided for

11:26

today it is going to be more does to because

11:28

everything is digitized wherever

11:31

you're giving your family owned lie on that

11:33

arc or with the tax

11:36

bill initiating that with the sword

11:38

with a twenty six years or years

11:40

old are reporting is

11:42

basically things which is and the room with

11:44

the tax of the which they're sharing with you

11:47

so he does have to you know to make

11:49

sure of that

11:51

oh what you're going to

11:53

these things post and spending

11:55

adequate amount of time to where they play their car accident

11:58

or been answered talking

12:00

about verification of correctness with respect

12:03

to AIS because that is

12:05

a statement which provides all the

12:07

details and we have been noticing quite

12:09

a bit of erroneous reporting

12:13

there. So if you're blindly going as per

12:15

the AIS statement saying okay

12:18

if it's reported there let's be reported you

12:20

might end up paying more taxes or

12:22

less because

12:24

that's income which is I mean details

12:27

which are collated from various service

12:30

providers and there could be mistakes on that.

12:32

So that is typically

12:34

where people make a mistake the second place where

12:37

people make a mistake is to use

12:38

the wrong form. So let's say you have

12:40

two house properties you start

12:41

off with IDR1 you realize you don't have

12:43

a place to report the second one

12:46

so you now have to you know go back we

12:48

do go to the IDR2 that

12:51

kind of thing. So those are

12:53

certain things which people really have to

12:56

kind of take care and make sure that

12:58

they're giving

13:00

this exercise even though it's cumbersome

13:02

the due time and respect that

13:04

it requires. Right

13:08

and you mentioned

13:10

AIS now in case

13:12

of any discrepancy whether when

13:15

it comes to form 26AS or AIS

13:18

what can taxpayers do if they realize

13:20

that there are errors in those forms?

13:22

So see typically what

13:25

used to happen

13:27

is

13:30

there used to be a mismatch between 26AS and the

13:34

form 16 that were issued by the

13:36

by the

13:39

employer okay

13:40

to a major extent that

13:43

possibility is reduced because now

13:46

unlike earlier days employers

13:48

used to you know separately issue forms

13:50

but now it is issued through

13:54

the tax system which is why whatever

13:58

is there in the 26A is the same. of

14:00

data is pulled into the AISD. The

14:04

26th and the AISD. So

14:07

the only place where there could be a possibility

14:10

of error and some people do go through that exercise

14:13

is that they actually summarize their

14:15

pay slips through

14:18

the year and tie up what is

14:20

the income in the bank account versus what is their salary

14:23

versus what is the tax system and

14:25

check it out. So in

14:27

case somebody, people

14:29

are doing that, then they might have some error. Otherwise,

14:33

the reason for mismatch could

14:36

be very, very, or the possibility of mismatch

14:38

between 26 years and the consisting

14:40

is low. The reason

14:42

for mismatch in AIS is, and

14:46

the possibility is also high, is

14:48

because it's information shared

14:50

by banks, mutual funds, everybody.

14:57

Now, what happens is the

14:59

information is shared as

15:02

a basic information. So there

15:04

may or may not be a tax impact

15:07

on that. So people might not be

15:09

given, it's due importance.

15:14

Probably there are mistakes in reporting. So

15:16

at times people do see they

15:19

having two bank accounts, but there are three reported

15:21

there. Transactions

15:23

of purchase of

15:26

shares, where the shares are reported

15:28

multiple times. So it's just

15:30

an error of reporting. And I think it's just

15:33

a matter of time actually. When the

15:38

people will be streamlining

15:41

the process and

15:43

making sure that things are

15:45

correctly

15:47

reported. OK. In such

15:49

cases, they just need to go ahead and

15:51

report accurate income and other

15:54

details as per their records, right?

15:56

Correct. The tax bill in the tax

15:58

return has to record their records.

15:59

details.

16:01

And they can also go

16:03

online and provide a feedback

16:06

saying, this is this

16:09

amount, all these line

16:11

items are incorrect, that could be one option.

16:14

Or what happens is even if you don't do

16:16

that, there

16:19

will be a mismatch reported in the

16:21

AIS versus the tax return file.

16:24

So that itself will trigger a query

16:26

to the taxpayer saying

16:28

that there is a mismatch which is reported. And

16:31

please let us

16:33

know what is going on. You have to just respond. Yeah,

16:36

you have to respond. And that's an opportunity

16:38

to kind of explain what

16:40

is right and what is wrong.

16:42

All right, all right. All right, Miss Rauti,

16:44

anything else that you would like to add, any other

16:47

tips that you have for our taxpayers who

16:49

would be filing, who would start filing their returns now?

16:52

Yeah, I would say, again, in

16:55

systems starting up early, not only it

16:57

will save you some

16:59

amount of tax because you will save,

17:02

say you file your return in June, it

17:05

will save you the interest for July if

17:07

there's a tax table. Your

17:10

process ends up quite a bit early.

17:13

And you will save, you know, looking at

17:15

different versions of the

17:18

software which is issued by

17:21

the tax department. And

17:23

lastly, towards the end, there

17:26

is a lot of, you know, traffic,

17:30

which the

17:32

site becomes very slow. So you will save

17:34

on that also. So I

17:37

would say this is it's best

17:39

to start early. And

17:41

also they should verify their returns after filing

17:43

them or submitting them online, right? Absolutely.

17:46

Because generally, people would

17:49

have their time linked with the online

17:51

card, which is made so simple.

17:54

So now you can

17:56

go ahead and online verify your

17:58

return. In case

18:02

you are not opting for that option but you want

18:04

to submit a hard

18:06

copy to Bypost,

18:09

then yes, you could go ahead and do that.

18:11

Alright, alright. Alright,

18:13

thanks a lot, Ms. Raute. Thanks a lot for being

18:15

on the show. Welcome. Pleasure

18:17

to be talking to you. Thank you so much once

18:19

again.

18:22

And with that, it's a wrap on this episode

18:24

of Simply Save. For more news, views

18:27

and updates, do stay logged on to moneycontrol.com.