The first thing you need to do is to collect all relevant documents (see table) and reconcile them to avoid inconsistencies in information. In addition, several changes have been made to RTI forms requesting additional information. Take for example ITR 1. The taxpayer must provide a detailed breakdown of wage income – in terms of salary, benefits in lieu of salary, perquisites, exempt allowances and deductions. “The government has notified a new Form 16 format in which this detailed salary breakdown must be given by the employer,” said Archit Gupta, Founder and CEO of Clear.

Those who have not submitted all proof of tax investment to their employer will have to gather the relevant documents themselves to claim possible tax breaks. “It is also advisable to match the same with the AIS (Annual Information Statement),” said Yeeshu Sehgal, Head of Tax Markets, AKM Global, a tax and advisory firm.

Interest on PF

The current tax year will be the first time taxpayers will be required to report interest earned on contributions over ₹2.5 lakh in their provident fund (PF) account. This threshold applies to contributions made by employees and not by employers. It also includes contributions paid to the voluntary provident fund (VPF). The 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 than ₹2.5 lakh and calculate the tax on the interest earned therein.

In accordance with EPFO ​​guidelines, tax will be withheld at source (TDS) at the rate of 10% on annual interest when the PAN is linked to EPF accounts, while the TDS will be 20% if the PAN is not is not related. Taxpayers should note that EPFO ​​will not deduct tax on accrued interest if the calculated TDS amount is up to ₹5,000, but this does not mean that the taxpayer’s individual tax liability is exempt.

Excess interest should be reported under income from other sources, and if TDS is not deducted, it will be added to total income and taxed at slab rates.

“Taxpayers can import the details of interest and amount deducted for tax from the Form 16A issued by the PF organization or their respective Form 26AS,” Gupta said.

Capital gains

Taxpayers who sold a building or land in the 2021-22 fiscal year will be required to disclose all information relating to the proceeds of the sale beginning in that year. “The sale of real estate triggers capital gains and additional information is sought to provide greater transparency in the calculation of the corresponding capital gains,” said Saraswathi Kasturangan, partner at Deloitte.

In the Long Term Capital Gains (LTCG) section of the ITR form, taxpayers are now required to indicate both the date of sale and purchase of the property. This is done because the real estate LTCG, which triggers when the property is held for more than 24 years by the taxpayer, is eligible for tax exemption if the gains are invested in accordance with Section 54 (proceeds of sale of residential property invested in residential property), 54EC (proceeds from the sale of residential property in government specified bonds) and 54F (proceeds from the sale of non-residential property in residential property ). Declaring the date of sale and purchase brings transparency as to whether the property is a long-term asset or not to qualify for these tax breaks.

All costs incurred to renovate or improve the property sold are also deductible from the sale price when calculating capital gains. These costs can be indexed to take account of inflation. Taxpayers must also provide the initial cost of the improvement as well as the indexed cost in the ITR form.

Additionally, if the house has been renovated several times, details by year of all improvement costs undertaken will need to be provided.

“This rule only applies to residential properties and not to the sale of commercial properties,” said Prabhakar KS, founding CEO of Shree Tax Chambers.

Reconcile AIS

The Annual Information Statement, introduced in November 2021, is a comprehensive financial statement that contains information on all financial transactions of a taxpayer, including income from different sources, purchase of foreign currency, TDS and TCS, advance or self-assessment tax paid to the government, refund initiated, financial transaction record that captures high value transactions, etc.

It is important that taxpayers verify all income shown in the AIS with TDS certificates, interest income certificates and Form 26AS, as any undeclared income highlighted in the AIS or a mismatch will result in a review. thoroughness on the part of the IT department.

If the taxpayer believes that any information in the AIS is incorrect, they should submit their comments to the IT department to have the error rectified before filing the ITR. “Taxpayers are advised to reconcile investment and income details and file the tax return based on actual figures,” Kasturirangan said.

Any dispute resolution may take 1-2 weeks, so it is advisable to submit your comments, if any, at the earliest to avoid missing the ITR filing deadline.

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