ITR filing strategies: Handling income from multiple sources

Filing an Income Tax Return (ITR) is straightforward for taxpayers with a single source of income. For example, if your income is solely from salary, you can easily file returns yourself using the e-filing portal of the Income Tax Department or through various private tax filing platforms.
 
However, many individuals have income from multiple sources such as salary, house property, business, equity investments, crypto, lottery etc. And it is not easy for them to handle ITR filing on their own. This is especially true for taxpayers who are not very accustomed to taxation terminologies and various rules. 
 
As the time to file ITR for Assessment Year 2024-25 is here, this article looks at some easy strategies that taxpayers having multiple income sources can follow to make their lives easy.
 
Gather necessary documents
 
If you have income from multiple sources, the first step you should take before ITR filing is to gather all important documents relevant for tax-filing at one place. These documents may include Form 16, 26AS, AIS. TIS, bank statements, investment documents, capital gains statements, home loan statements etc. Going through these documents will help you have a clear understanding of all your sources of income and the taxes you have already paid in FY 2023-24.  
 
Choose the right ITR Form
 
Selecting the correct ITR form is probably the most basic but important step for individuals with income from multiple sources, including freelancers and even moonlighters [individuals with multiple concurrent jobs often involving an additional job outside regular working hours]. Selection of wrong ITR form may lead to complications. There are seven types of ITR forms from which you can choose depending on the sources of your income. For example, if you have capital gains in addition to your salary income, choose ITR-2. If you also have a business income apart from the above two, go for ITR-3.
 
Verify Form 26AS
 
Form 26AS will give out all the details related to various TDS and TCS paid in FY 2023-24. It is pertinent to verify and ensure that any income on which TDS had been deducted is not missed in income tax return. You can download Form 26AS the TRACES website.
 
Verify TIS and AIS
 
The Taxpayer Information Summary (TIS) is the summarised form of your Annual Information Statement (AIS). If you find any discrepancy in your TIS, the AIS will give you an in-depth transaction-wise data regarding the same. The AIS gives a comprehensive overview of all the transactions which are linked to your PAN number. These include salary received, interest on your savings bank account or fixed deposit, sale and purchase of shares and mutual funds or any other kind of capital asset, taxes paid and demand/refund issued. If you find any kind of discrepancy in the data mentioned in the AIS, you should ideally give a feedback through the AIS portal itself to get it rectified.
 
Select ITR-4 if you are a Freelancer/Consultant
 
If you are not an employed person and giving out services on yourself for a fee, ITR-4 would suit you the most. This ITR allows a person to take 50% deduction straight on your income if your gross annual receipts are below Rs 50 lakh (Rs 75 lakh w.e.f. 01.04.24). You can further also take advantage of Chapter VI-A deductions on your income post 50% deduction. Care must be taken that GST registration and corresponding statutory obligations are followed if your income goes beyond 20 lakhs.
 
Seek Assistance
 
Taxpayers are required to ensure that their returns are filed correctly. Incorrect filing for returns lead to tax-troubles in future. Having multiple sources of income often leaves a lot of scope for doubts and confusions. In such a situation, it is advisable to seek help from a trusted tax expert, preferably a Chartered Accountant, to correctly file returns.
 
Start return filing process early
 
Lastly, it is advisable to start the preparations for return filing at the earliest, especially for taxpayers having multiple streams of income. This will provide enough time to address any confusion or doubts while enabling early filing. Please note that taxpayers, whose accounts don't need to be audited, are required to file their returns for income earned in FY 2023-24 by 31st July 2024, failing which they will end up paying late filing penalty. Further, early filing also leads to early processing of Income Tax Refunds.
 
Raghav Gupta is Co-Founder of 1% club and CA Sagar Dave is Financial Planner - Wealth Management at 1% Club.