ITR Filing: Here’s how to maximise your refund while filing Income Tax Return

Filing Income Tax Return (ITR) can be a daunting task for many, but it becomes simpler once you understand the steps involved and the potential tax benefits that can be harnessed. Under various sections of Income Tax Act, 1961, the taxpayers can claim different deductions and reduce their tax liability significantly. In order to maximise your Income Tax refund you need to meticulously plan your tax saving investments.

Here are a few simple steps to maximise your income tax refund through various exemptions and deductions while filing your ITR.

The deadline for filing Income Tax Return for FY 2022-2023 (AY 2023-24) is July 31, 2023.

Understanding ITR filing and tax refunds

When you file your ITR, you reconcile your income, deductions, and tax payments with the Income Tax Department. If your actual tax liability is less than the tax deducted at source (TDS), you will receive a refund. The refunds as generally processed within 15 days and you can also track the refund status online.

Timely and accurate filing

File your ITR before the deadline to avoid penalties. This not only helps in avoiding late fees but also ensures smooth processing of your tax refund. Make sure you don't miss out on any income sources while filing your ITR, including interest income from savings accounts and dividends from stocks. Accurate ITR filing not only prevents unwanted notices but also ensures the correct calculation of tax liability.

Maximising deductions

Utilise tax deductions under various sections to reduce your taxable income. The most commonly claimed deductions are under Section 80C, which includes investments like PPF, NSC, NPS, life insurance premium, tuition fees, and home loan principal. Beyond Section 80C, taxpayers can claim deductions under Sections 80D (medical insurance premiums), 80DD, 80DDB, 80G, 80E, and 80U.

Data reconciliation

It is crucial to match the data in Form 16, Form 26AS and bank statements to ensure there are no discrepancies in your ITR. This not only helps in avoiding unwanted notices but also ensures the speedy processing of refunds. Also, do not forget to select the appropriate tax regime based on your individual needs and financial situation to maximise your tax savings.

Documentation and validation

Gather all your financial information, including payment slips, bank statements, and evidence of investments and rental income. This will ensure you have all the information needed to fill in your ITR accurately. Waiting till the last moment to gather details can cause you unnecessary delays. Ensure your bank account is validated on the income tax filing e-portal to receive your tax refund smoothly.