Filing ITR? Know best practices for your benefit!

CA Chanchal Jain | Last updated: 25 August 2020

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When filing your Income Tax Return (ITR), it's easy to overlook crucial details. This guide highlights best practices to ensure accuracy and long-term benefits. Key areas include thoroughly analysing all bank accounts for new income or investments, correctly declaring co-ownership details for house property income, and meticulously recording previous years' losses in Schedule CFL to claim set-off benefits. It also clarifies deductions for senior citizens and the use of the separate 'Details of Investment' worksheet.

We have witnessed over time how extensive the Income Tax Return (ITR) filing process has become, covering all possible aspects of income or expenses, profit or loss, and more. Although we try to cover everything, a few elements are still left out, either we do not spare that much time for filing the return or we do not know exactly what aspects are left out.

So, pause! Before rushing towards filing ITR this year, follow a few more best practices that may save you time, benefit you over a number of years, and help you understand any new filing provisions. Note that this article assists those who already know at least a few aspects of filing ITR. Without further ado, let's dive into knowing what these best practices are and how these can be beneficial.

ITR Filing Best Practices: Save Time and Benefit Long Term

Scenario	Usual Practice	Best Practice
Bank Analysis	A lot of us may have made it a usual practice to ignore bank accounts when filing ITR that may result in non-declaration of any cash deposits and similar transactions.	At the time of preparing ITR, you should always analyze all your bank accounts with a view to encounter new income, new investment, gifts, cash deposits and so on.
Income from House property	If you have income from house property, even though it is mandatory to file co-owner details, we may usually ignore it, either we may not have details of the co-owner or sometimes just for the sake of completion, we may say that the property is not co-owned.	While declaring income from house property, details of the co-owner must be added, such as name of the co-owner, percentage share in property, PAN and Aadhar of the co-owner. Refer to example below this table to know the benefit of following this practice.
Losses of earlier years	Per Income Tax Act, the income of the assessee is bifurcated in different heads of income such as salary, house property, capital gains and other sources. The Act allows to set off income under one head with the loss under another head subject to certain limitations. For claiming the set-off benefit, it is also mandatory to fill the details of losses if any in Schedule CFL which we usually forget.	If the assessee did not carry forward any loss in Schedule CFL in any year, it would not be eligible to get the benefit to set off the amount of loss. To avoid such situation, it is recommended to prepare the assessment year-wise chart with heads of income along with amount of loss, and declare the same in Schedule CFL.
Interest Income for senior citizens	Section 80TTA was introduced in Income Tax Act to claim deduction of upto INR 10,000 in respect of interest on deposits in savings account. Note that this deduction is not for senior citizens. For senior citizens, deduction u/s 80TTB could be claimed upto INR 50,000. Generally, senior citizens may consider both the deductions in ITR, even if they are not eligible for the same.	Deduction u/s 80TTA and 80TTB must be considered as separate. Normal taxpayers should claim deduction u/s 80TTA and senior citizens u/s 80TTB. Interest on saving and recurring/fixed deposit should be calculated separately to enable taxpayers to claim benefit of deduction.
Separate work sheet for Details of investment	This is a new provision introduced in 2020 due to COVID-19 pandemic situation.	Due to COVID-19 pandemic and lockdown, government has extended the time limit for making investments for the purpose of claiming tax deduction. There is a separate worksheet, namely DI, in ITR, wherein investment made during lockdown period can be maintained.
Declaration regarding expenditure on electricity or foreign travel	This is a new column in ITR that has been introduced in financial year 2019-20. The individual is liable to file Income Tax Return if his income exceeds maximum amount not chargeable to tax. So number of assessee do not file ITR as income is equals to or less than exemption limit.	From financial year 2019-20, it has been made mandatory to file return even if income is below the taxable limit if the taxpayer has: Incurred expenditure on foreign travel in excess of INR 2 lacs Deposited cash in bank in excess of INR 1 crore Incurred expenditure on electricity bill exceeding INR 1 lac

Example of Income from House Property

Let's look at an example wherein we will compare two scenarios about declaring the ownership of a property in ITR. Suppose the property in question is owned by three brothers namely A, B and C and the same is let out at INR 120,000 per month. As we already know, while declaring income from house property, the details of co-ownership need to be declared in ITR.

Also, as income component will be distributed among three, thus results in taking exemption benefit among three of them.

Scenario 1: If the property is not declared as co-owned. Suppose, out of three brothers, only A declares the income from house property and shows his ownership as 100% in ITR. The complete rental income will be added to his taxable income and only A will get exemption of INR 250,000 as shown in table below:

Particulars	Income of A
Rent Income	1,440,000
Less: Basic Exemption	250,000
Taxable Income	1,190,000
Tax	169,500

Scenario 2: If the property is declared as co-owned. Now, as a good practice, suppose all the brothers declare the income from house property equally. The rental income is distributed among the three and all of them avail the benefit of maximum amount not chargeable to tax:

Particulars	Income of A	Income of B	Income of C
Rent Income	480,000	480,000	480,000
Less: Basic Exemption	250,000	250,000	250,000
Taxable Income	230,000	230,000	230,000
Tax	11,500	11,500	11,500

The above article is written by CA Chanchal Jain and could be reached for any queries, doubts relating to this article at chanchaljain2007@gmail.com or ca.jain18@gmail.com.

Disclaimer: The above article is meant for informational purpose only and does not purport to be advice or opinion, legal or otherwise, whatsoever. While due care has been taken during the compilation of this article to ensure that the information is accurate to the best of our knowledge and belief, the contents of such article do not substitute for professional advice that may be required. The individual expressly disclaims all and any liability to any person who has read this document or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this article.

FAQ :

Analysing all your bank accounts helps you identify new income, investments, gifts, and cash deposits that might otherwise be missed, ensuring a more accurate tax return.

When declaring income from house property, you must include the co-owner's name, their percentage share in the property, and their PAN and Aadhaar details.

To claim the set-off benefit for losses from earlier years, it's mandatory to fill in the details in Schedule CFL. Preparing an assessment year-wise chart of income heads and losses is recommended.

Section 80TTA allows a deduction of up to INR 10,000 for interest on savings accounts for normal taxpayers. Senior citizens can claim a deduction of up to INR 50,000 under Section 80TTB for interest on savings and fixed/recurring deposits.

You must file an ITR if your income is below the taxable limit but you have incurred expenditure on foreign travel exceeding INR 2 lacs, deposited cash in bank exceeding INR 1 crore, or incurred expenditure on electricity bills exceeding INR 1 lac.

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About the Author

CA Chanchal Jain

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I am Chartered Accountant in full Time Practice. Please connect for any queries like apply for New PAN, correction in existing PAN, GST registration, Filing of GST returns, Tax Audit, Statutory Audit, taxation wrk, etc. My email is ca.jain18 @ gmail.com.

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