Filing your Income Tax Return (ITR) can be complex, but for salaried taxpayers, there are four key areas to focus on to ensure an accurate and compliant filing. The deadline for filing ITR for FY 2024-25 is September 15, 2025.
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A common mistake is simply sticking with the same tax regime as the previous year without re-evaluating. You should use an income tax calculator to determine which of the two regimes—the old or new—is more beneficial for you in the current financial year. The new tax regime might lead to a lower tax liability and a tax refund, especially if your deductions are low. Even if your employer’s Form 16 followed the old regime, you are not obligated to use it.
2. Avoid Under-reporting of Income
Under-reporting income can lead to penalties. One common error is miscalculating long-term capital gains (LTCG). The tax rate for LTCG changed to 12.5% from the previous 10% on July 23, 2024. It is crucial to compute your LTCG based on the new, correct rate to avoid any discrepancies with the Income Tax Department’s records.
3. Correctly Report Foreign Assets
If you have foreign assets or income, such as foreign ESOPs (Employee Stock Ownership Plans), you must be careful to report them accurately. Simply including foreign ESOPs under the “salary perquisites” section is not enough. These assets must be declared in the “Foreign Assets” schedule of your ITR. Hiding or wrongly reporting these assets can lead to significant penalties. If you own foreign assets, you are required to file ITR-2, a more complex form, regardless of your total income.
4. Disclose All Crucial Information
Beyond foreign assets, you must not conceal other crucial facts that impact your tax filing status. For instance, if you are a director in a company, you must file your return using ITR-4. Similarly, if you own physical shares or securities in an unlisted company, you must disclose these investments. Full and transparent reporting of all your income, assets, and liabilities is essential to ensure compliance and avoid issues with the tax authorities.
