Precautions to Take While Filing ITR Form

2025-07-21

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Key Takeaways

Choose the correct ITR form based on your income type, amount, and taxpayer status.
Disclose all income sources including interest, gifts, capital gains, and rental income to avoid mismatches.
Keep supporting documents like Form 16, investment proofs, and rent receipts handy for future reference or audits.
Cross-verify your tax credits using Form 26AS before final submission.
Don’t wait till the last moment. File your return on time and ensure tax dues are cleared to avoid penalties.

Prepping up to file your Income Tax Return for the last financial year? This year’s ITR filings may have been postponed a bit, but it has not reduced the complexity of it. However, if you know your way around the key factors, you may have a good time filing your returns.

Here is a list of five key factors for you to tread cautiously about while filing your income tax returns this year:

Know Your ITR Form

The first thing is to start with the correct ITR form applicable to you. The following ITR forms apply to individual taxpayers under different circumstances:

1. ITR-1 or Sahaj

ITR-1 is the most commonly used ITR form, and here’s when you should use this form:

Your total income for the previous financial year (Previous Year or PY) is less than ₹50 lakhs.
Your agricultural income is less than ₹5000 for the previous financial year or PY.
Your income sources include only the following:
- Salary or pension income
- Income from one house property
- Income from other sources, such as interest and gifts, but not from lottery or horse race winnings
If you have income from more than these sources, including taxable capital gains, you will need to use other forms.
You are a resident Indian for the previous financial year. If you are not ordinarily resident or non-resident, you will need to use another form.

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3. ITR-3 Form

We have seen that the previous two forms have not included the income from business and profession. ITR-3 form is for individual and HUF taxpayers who have income from business and profession.

In this case, the total income should be more than ₹50 lakhs in the Previous Year or the turnover of business should be more than ₹2 crores. You should use this form if you also meet any of the following conditions:

You are the director of a company
You have invested in unlisted equity shares in the Previous Year
If you are a partner in a firm

Did You Know?

More than 93% of income tax returns were filed online in FY 2023–24 using e filing 2.0.

Source: The Economic Times.

4. ITR-4 or Sugam

You need to use ITR-4 if your income includes income from business and profession, and you meet the following criteria:

You are a resident Indian for the Previous Year
Your total income is less than ₹50 lakhs
If you have opted for the presumptive income scheme under sections 44AD, 44ADA, and 44AE of the Income Tax Act

As an individual or HUF taxpayer, these are the dedicated ITR forms for you. If you need to file returns as an LLP or any other taxpayer entity, you need to use other ITR forms.

5. ITR-5

ITR-5 is applicable for:

LLPs
AOPs
BOIs
AJP
Estate of the deceased
Insolvent estates
Business trusts
investment fund

6. ITR-6

Companies that are not claiming any exemption under section 11 on income generated from any property meant for charitable or religious purposes must opt for ITR-5. It is to be filled out electronically.

7. ITR-7

ITR-7 is for people and companies who are required to file returns under sections:

139(4A): for a person mentioned in the receipt of income generated from any property under a trust or any other legal obligation for charitable or religious purposes
139(4B): for political parties, provided the total income crosses the maximum amount not chargeable to income tax (this should not interfere with the provisions of section 139A)
139(4C): for scientific research associations, funds, universities or other educational institutions, news agencies, associations or institutions referred to section 10(23A) and 10(23B)
139(4D): for colleges, universities, and other institutions that do not come under any other provision of this section.
139(4E): for business trusts not falling under this section’s other provisions.
139(4F): for investment funds as per section 115UB

Have You Included All the Incomes?

So, you have seen how different types of incomes will affect your choice of the ITR form. Thus, it is extremely important for you to know which types of income you earned in the previous year.

Here are the 7 heads of income as per the Income Tax Act and examples of such incomes:

Salary income, including bonuses and gratuity
Wages/Salaries from corporations, including commission income
Pension and retirement benefits
Leave encashment
Income from house property
Rental income
Income from the sale of a property is not counted under this head

Capital gains will include the following gains from:

Sale of equity shares, mutual fund units
Sale of house property
Sale of bonds and debentures
Any other asset like gold, paintings, vintage cars, etc.

The sale and purchase of these assets should not be your business. In that case, we move to the next income head:

Profits & gains from business & profession
Profit or loss from a business activity
Dividend or interest from unlisted equity shares of a company
Income from a firm as a partner

Income from Other Sources:

Interest on a savings account, fixed deposits, small savings schemes like NSC, KVP, etc.
Dividend income from listed equity shares
Lottery winnings
Gifts received in cash or property

If you have multiple bank accounts, you will need to check the interest income from all and add it to your ITR.

Keep the Documents for Future Reference

While we enjoy filling out the deductions for the FY to reduce our tax liability, we should also take care of the records. You should keep all the documents for your tax-saving investments in the previous year in one place. These documents will include:

Receipts of premium payments for life and health insurance plans
Statements of investment in tax-exempt mutual fund units
Contribution to pension plans other than EPF
Rent receipts
Repayment of the home loan principal amount in the Previous Year
Receipts of children’s tuition fee payments
All the Form-16s from the Previous Year (if you change your job, you will have more than one Form-16 in a year)
Copies of certificates of deposit into tax-saving schemes like NSC and Senior Citizen Savings Scheme.

Check Form 26AS

You can download and view on the TRACES portal of the income tax filing website of the Government of India. This form gives you a summary of total TDS deduction by your employers, banks, mutual funds and other investment or business clients.

You can also ask for a TDS certificate from every source of income which deducts TDS on your income. This will help you tally the details on Form 26AS and add any missing TDS details.

TDS credit available on the Form 26AS will automatically apply to your tax liability calculated at the end.

Do it Before the Due Date

Remember that it’s not enough to file your ITR on time. You also need to ensure that 90% of your tax liability for the previous year has been deposited with the IT department within the financial year.

This can be done in four installments throughout the financial year. However, if you end up missing the deadlines, you may have to pay interest on the remaining tax liability for the previous year.

How to Avoid Mistakes?

There is more than one way of avoiding all the mistakes on your ITR. If your income includes more than three sources of income, you can easily handle filing ITR for the following three heads of income:

Salary income
Interest or Gift income (Income from Other Sources)
Income from House Property

If you have taxable income from other heads, it’s better to get assistance from professionals. If you are using an ITR form other than ITR-1, you will need to calculate your income tax offline. Thus, you will be better off using professional services to navigate the complex tax calculations.

Conclusion

With the right preparation and a little attention to detail, filing ITR doesn’t have to be stressful. Start with the correct form, keep your documents organised, and double-check your income sources. Also, there’s no harm in asking for help from a professional. So, follow the checklist, and file with confidence.

Glossary

e filing 2.0: The advanced income tax filing platform by the government of India for simpler and quicker ITR filing.
Income Tax Slab: The structure of tax rates against various ranges of income under the New and Old tax regimes.
Section 80C: A provision of the Income Tax Act for deduction up to ₹1.5 lakh for particular investments.
ULIP: Unit Linked Insurance Plan brings insurance together with equity/debt investment.
Section 10(10D): Tax-free maturity benefits from life insurance policies, subject to specific conditions.

FAQs

You can invest in Public Provident Fund, Employee-Linked Savings Scheme, National Savings Certificate, and more. There are several options to invest under Section 80C in addition to insurance, using which you can claim a tax deduction of up to ₹ 1.5 lakh.

The combined total tax deduction for both 80C and 80CCC cannot exceed ₹1.5 lakh.

Canara HSBC Life Insurance offers you various tax-saving insurance products online. The application process is easy and helps you get the most out of your insurance premiums and maturity payouts.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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