It is that time of the year when the individual taxpayer must file his/her income tax return for the income earned during the previous financial year (FY).
Depending on the residential status, income and assets held by the taxpayer, the appropriate income tax return form, and the due date for filing the same shall be determined.
In case the taxpayer has income other than profits or gains of business or profession, he/she will need to file his/her return for FY 2022-23 in ITR 1/ ITR 2 on or before 31 July 2023.In this article we shall focus on key considerations emanating for filing an ITR-2.
The form ITR 2 is applicable to an individual or a Hindu Undivided Family (HUF) not having income chargeable to income-tax under the head Profits or gains of business or profession.
Accordingly, ITR 2 can be filed by individuals or HUF falling under any of the below criteria:Whose total income exceeds INR50 lakh.Who is a Director of a Company.Whose total income for the year includes:income from more than one house property.income from winnings from lottery or income from racehorses.income from capital gains or winning from lotteries.who is a resident of India and wishes to claim benefits under double taxation avoidance agreements.who is a resident and has global income and assets (including financial interest in any entity) located outside India or has signing authority in any account located outside India, irrespective of the quantum of total income for the FY.ITR 2 Filing Online 2023-24: Important tips, FAQs on capital gains, sale/purchase of propertyFor preparing the ITR 2, the taxpayer needs to collate the following sample list of information and documentation:The Annual Information Statement (AIS) is a detailed statement containing data of specific financial transactions, including specific income, specific investment, foreign remittance made by taxpayer during a particular FY etc.
In addition to the TDS/TCS details, AIS will also report interest, dividend, stock market transactions (e.g., purchase and sale of Indian listed stocks etc.), mutual fund transactions, foreign remittance information, any advance taxes paid, etc.
In case of mismatch of information, the taxpayer has an option to provide feedback on the Insights portal in respect of transactions not relating to the taxpayer.Form 26AS reports details of income on which tax is deducted at source during a particular FY, specified transactions like tax refund, purchase/sale of property, etc.Salary income along with related deductions, and exemptions if any, shall be available in Form 16.
The taxpayer may request the breakup of the salary components from the employer to verify the same with part B of Form 16.Rental income from house property on which tax has been deducted or where the tenant has claimed exemption for House Rent Allowance, the same shall be reported in Form 26AS and Form AIS, respectively.
Further, in case of interest on housing loan, if any, the interest certificate issued by the lender for the relevant FY.Sale of asset (either securities, equity, or mutual fund) will be reported in Form AIS in the year of sale.
The taxpayer may obtain brokerage account statements to compute the capital gain/ loss.Income such as interest and dividends will be reported in Form AIS / Form 26AS.
The same may be verified from the interest statements/ certificates issued by the bankers.
The dividend received may be verified with the brokerage account statement.Purchase of asset will be reported in Form AIS to ensure all income from such purchases has been captured in the tax return.In case, the taxpayers total income exceeds INR50 lakh, the assets and liabilities held by him as on 31 March would need to be reported.In case, the taxpayer qualifies as Resident and has overseas assets as on 31 March, the details of overseas assets need to be reported.In case of investment in any unlisted shares, the same also needs to be separately disclosed.There are also specific disclosures required for specific type of assessees e.g., in case of non-residents, the jurisdiction of residence and taxpayer identification in that country of the Non-resident is required, if you are a Non-Resident and a Person of Indian Origin /Overseas Citizen of India, then the number of days of stay in India for the relevant financial year and past four financial years also has to be reported etc.While there is facility to auto-populate specific data, the taxpayer should verify the information auto-populated in the ITR 2 with the actual supporting documentation with respect to the income earned by the taxpayer such as interest certificate, brokerage account statements for dividends etc.
It is prudent for the taxpayer to reconcile the details of income and tax deduction reported in Form 16, Form 26AS and AIS with respect to the credits in the bank account with an objective to ensure no income streams are inadvertently missed out.The entire return preparation to filing journey from a taxpayers perspective extends from identification of the correct tax return form to verifying the return after uploading the same on the income tax portal.As the due date for filing ITR 2 is fast approaching (on or before 31 July 2023), taxpayers should start collating details of income, related tax deduction and documentation to submit an error free, complete return and avoid any inadvertent adverse interest and penalty consequences, etc.(The author is Partner and Head, Global Mobility Services, Tax, KPMG in India.
Views are personal)