Should you file your Income Tax Return on your own ?

We live in the era of easy information and anything which we want to know about is available on our fingertips, to boost our DIY (Do It Yourself...!) confidence. One such important thing, which is said and claimed that you can do on your own is, filing your Income Tax Return (ITR). Today, we will try to answer this question whether you should file your ITR on your own.

First of all, it is necessary to understand what is ITR and why it is so important document. To put it simply, ITR is an annual statement through which you provide the details of your incomes from different sources, transactions related to sale and purchase of properties and assets, your investments, taxes paid and payable and other financial information as asked in the ITR form. It can be explained as a single consolidated statement through which you disclose all your financial transactions to the Income Tax department and therefore, ITR must be filed with utmost care, accuracy and correctness. 

Who can file his/her ITR on his/her own?

If you have not so complicated income structure (having income from salary, interest and dividend only) and if you have same sources of income every year, then you may choose to file your ITR on your own. Here it is necessary that you have thorough knowledge about taxes applicable, deductions available and other intricacies of your sources of income, to avoid any big mistakes while filing the ITR. You should also be well versed with the online portal of the income tax department, on which ITR is to be filed.

What should be your approach as a DIY return filer?

Initially, you should consult a Chartered Accountant (CA) to file your ITR. Simultaneously, you should gather the knowledge about tax computation and other provisions of the Income Tax Act, 1961 applicable to you and try to compute your income and taxes on your own. Then you should compare the draft tax computation prepared by you with your ITR prepared and field by CA and correct your mistakes, if any. This practice should be followed for initial two-three years consistently, until you get confidence to file your ITR on your own correctly. Thereafter, you can start filing your ITR on your own. 

Please note that even if you file your ITR on your own, you should consult a CA from time to time for tax planning, investments related advice or before entering into any big financial transactions like taking any loan, buying or selling a property, before selling any big chunk of your shares/mutual funds, etc., so that you get a better clarity of the resultant tax liability or any other financial effect of that transaction. Additionally, you have to keep your self updated for any changes / amendments made in the tax laws and provisions, which are applicable to you. It is always advisable to get your ITR filed by CA, if you have earned any such income which is not from your regular sources of income or have entered into any transaction of sale of property, or any such financial transaction, which is not done by you every year.

Benefits to get your ITR filed by a CA:- 

(1) Filing of ITR itself is a very technical process. If you don't have keen interest to manage your financial compliance on your own, you may face difficulties while filing ITR and chances are there that you make some mistake. In such a situation, things become easier if you consult a CA.

(2) It may happen while filing ITR that knowingly or unknowingly, you do not claim certain exemptions or deductions which are available to you, or you do not set off losses of previous years against income of current year or you make any other mistake or forget to disclose something. To avoid any such mistakes, you should get your ITR filed by a CA. 

(3) If you want to file your ITR on your own, then either you will have to use the utility available on the portal or you will have to fill it directly on the portal. This is possible only when you are well versed with the functionalities of income tax portal. If you are not so comfortable with it, you should take the help of a CA. 

(4) At the time of preparing ITR, you have to prepare a set of documents and refer to some statements which are to be downloaded from the portal like Form 26AS, AIS, TIS, etc. Moreover, different types of incomes require different supporting documents/statements to report that income correctly in the ITR. A CA will guide you and provide you with the list of documents and statements to be kept on record, which will also serve as supporting proofs in case of any need arises in future.

(5) Merely filing the ITR is not the end of the task. You will also have to track whether your ITR has been processed correctly and whether there is any dis-allowance of deduction or expenses made by the income tax department, which will result into either additional tax demand or reduction in the refund. This entire process is online, which requires checking on the portal from time to time till your ITR is processed successfully and also keep on checking the emails for any update. If you feel that you don't get time to track all these or you are not well versed with the process, then you should consult a CA who will take care of this entire process flow.