6 Essential Steps to Maximize Your Income Tax Refund for FY 2024-25:

6 Essential Steps to Maximize Your Income Tax Refund for FY 2024-25

The income tax filing season has begun. According to new amended rules, filing income tax returns has been made compulsory for all taxpayers except those earning an income of more than Rs 2.5 lakh per annum under the old tax regime and more than Rs 3 lakh under the new tax regime. Filing an Income Tax Return (ITR) not only helps the tax department figure out how much tax a person really needs to pay, but it also helps people get back any extra tax they may have paid. Taxpayers are refunded in several cases when the advance tax paid by the taxpayer under self-assessment is more than the actual tax required to be paid, tax deducted at source (TDS) on income sources like salary, interest on securities or debentures, dividends, or others is more than the tax required to be paid, or when tax is imposed on the same income twice in India and in another country that has a tax agreement with India. Additionally, there might be cases where a mistake in the tax calculation is corrected, which lowers the amount of tax you have to pay. Or you may have forgotten to report certain investments or expenses earlier that could help reduce your tax.

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Hence, it is necessary for taxpayers to follow some essential steps before filing an income tax return to maximise their return:

Timely File Your Return

Always ensure you file your income tax return on time. When not filed on time, it may cause you penalties. However, you will additionally be awarded a few benefits to reduce your losses.

Claim All Eligible Deductions

• Taxpayers are advised to claim all possible deductions they are eligible for under the Income Tax Act. Deductions such as investments under 80C, health insurance under 80D, NPS under 80CCD(1B), and donations under 80G may be claimed.
• Also, if you are claiming HRA or other allowances, such as travel and medical, claim them using proper document proofs.

Select the Right Regime

Selecting the right tax regime also plays a vital role. The new tax regime does not permit investment and some other expenses.

Match Your Tax Credits

• Always check your Form 26AS before filing the income tax return. In Form 26AS, you can check the amount of tax that has already been deducted from your income, no matter if it is from your employer, bank, or client site. If you have deducted the tax amount more than required, then you can claim some amount of it back in the form of a refund, but only if you have notified every detail correctly.
• Never forget to mention the amount of TDS and advance tax paid by your employers, banks, or other institutions to ensure a perfect refund claim.
• Notify Them of All Income and Collect All Required Documents: Always ensure to collect all necessary documents before filing your income tax return, such as Form 16, interest certificates, Form 26AS, AIS, and investment details, in order to claim all required refund opportunities.
• To prevent any future complications, taxpayers are advised to report all sources of income, such as bank interest, freelance earnings, and others.

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Use Losses to Save Tax

If you lost money in stocks or property, you can use that loss to reduce your taxable income and pay less tax.

File Accurately and Early

Filing your tax return early and verifying it using Aadhaar OTP or net banking helps you get your refund faster. Before submitting, carefully check all your details, like your PAN, bank account number, and deductions, to avoid delays.