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ITR Filing Simplified: For many salaried taxpayers, filing an income tax return (ITR) has traditionally meant entering the details available in Form 16. However, the filing process has become far more comprehensive in recent years. With the Income Tax Department relying on information available through Form 26AS, the Annual Information Statement (AIS) and the Taxpayer Information Summary (TIS), taxpayers are expected to report all sources of income accurately.

Any mismatch between the return filed and the financial information available with the department may invite scrutiny, resulting in tax demands, interest, penalties or delayed refunds.

Employees who have switched jobs during the financial year, chosen an unsuitable tax regime, failed to disclose capital gains or foreign assets, or claimed deductions without proper documentation could end up facing additional tax liability. Filing an accurate return now requires much more than simply referring to Form 16.

Don't Depend Only On Form 16

While Form 16 contains salary details and   (TDS) reported by an employer, it may not capture every source of income. Interest earned from savings accounts or fixed deposits, dividend income, rental earnings, freelance income and capital gains from investments may not be reflected in the document.

Before filing an ITR, taxpayers should compare the information in Form 16 with Form 26AS, AIS, TIS, bank statements, investment records and capital gains statements. Ignoring income already reflected in these records may lead to mismatch notices from the tax department.

Selecting The Wrong Tax Regime Can Be Costly

Another frequent mistake is opting for a tax regime without comparing the overall tax liability under both the old and new systems.

Although the new tax regime offers lower tax rates, it restricts several popular exemptions and deductions, including House Rent Allowance (HRA), Leave Travel Allowance (LTA), deductions under Sections 80C, 80D and 80CCD(1B), along with interest benefits on self-occupied home loans, except where specifically allowed.

Taxpayers should calculate their tax liability under both regimes after considering standard deduction, eligible exemptions, employer contributions to the National Pension System (NPS), home loan interest and investment-linked deductions.

Those earning business or professional income should also remember that switching between tax regimes is subject to specific rules, unlike salaried taxpayers, who generally have the flexibility to choose each year.

Claim Deductions Only With Proper Proof

Tax benefits under Sections 80C, 80D, 80CCD, 80G and similar provisions should only be claimed after the eligible investment or payment has actually been made.

Some employees declare proposed investments to their employers for TDS purposes but fail to complete those investments before the financial year ends. Claiming deductions without supporting documents can result in tax demands during assessment.

It is advisable to retain insurance premium receipts, ELSS statements, provident fund records, home loan repayment certificates and donation receipts before claiming any deduction.

Capital Gains And Foreign Asset Disclosure Need Extra Attention

Employees who invest in shares, mutual funds, employee stock option plans (ESOPs), property or other capital assets should ensure capital gains are reported correctly. The calculation depends on factors such as holding period, acquisition cost, sale value, expenses and available exemptions. Errors in reporting short-term or long-term gains can significantly increase tax liability.

Similarly, resident and ordinarily resident taxpayers must disclose foreign assets and overseas income where applicable. This may include foreign bank accounts, overseas shares, foreign ESOPs, retirement accounts or financial interests in foreign entities.

Failure to disclose foreign assets may attract stringent consequences under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Under Section 43 of the Act, taxpayers may face a penalty of Rs 10 lakh for failing to furnish required information or reporting inaccurate particulars relating to foreign assets. However, this penalty does not apply to assets other than immovable property if their aggregate value does not exceed Rs 20 lakh during the relevant financial year.

Don't Ignore Bank Details And Return Verification

Incorrect bank account information, failure to pre-validate an account or mismatches between PAN and bank details can delay tax refunds. Taxpayers should verify their account number, IFSC code, account type and PAN linkage before submitting their returns.

Equally important is completing the verification process after filing. An ITR must be e-verified within the prescribed timeline through Aadhaar OTP, net banking, a demat account, a validated bank account or by submitting a signed ITR-V where applicable.

An unverified return may be treated as invalid, leading to refund delays, non-processing of the return and possible consequences associated with non-filing.

With the Income Tax Department now cross-checking taxpayer information using AIS, TIS and Form 26AS, filing an ITR has become a detailed compliance exercise rather than a simple transfer of Form 16 figures. Reviewing all sources of income, verifying deductions, choosing the right tax regime and completing disclosures accurately can help taxpayers avoid unnecessary notices, penalties and delays while ensuring they claim all eligible tax benefits.