Filing tax returns is an annual mandate that tax payers have to comply with. The last date which is drawing near — July 31, 2010. In a haste to meet the deadline, make sure you do not miss key elements that can cause trouble later.
Info cross verified
No income-tax return will be accepted without the PAN and incorrect PAN can result in a fine being levied. Communication address should be correctly stated as all notices or other communication from the income-tax department will be sent to the provided address.
Also make sure that the MICR code is correct if you want an electronic refund and also ensure that bank account details are correctly stated for a hassle-free refund.
Safe keep documents
The income-tax department has done away with enclosing documents while filing returns i.e. proof of tax, statement showing computation of taxable income etc.
Not having to produce it at the time of filing returns does not mean that you can put away the documents carelessly. In case of scrutiny, the income-tax authorities may need supporting documents for verifying the claims made in the income -tax returns.
Disclose exempt income
Income such as dividends from mutual funds and long-term capital gains on listed securities, are exempt from tax. Even though the tax laws do not require you to pay tax on the same, the law requires you to report these in your tax return.
Investments above a prescribed limit have also to be disclosed as per income-tax laws. Such investments are:
* Mutual fund investment in excess of Rs 2 lakh.
* Cash deposits in excess of Rs 10 lakh.
* Credit card payment in excess of Rs 2 lakh.
* Bond investment in excess of Rs 5 lakh.
* Property bought or sold in excess of Rs 30 lakh.
Report income from previous job
Employers deduct TDS from the employee’s salary. While computing the TDS, employers generally provide the basic exemption deduction to the employee. If at the time of changing the job, the employee has not informed the new employer, it could lead to a situation where the TDS cut by the new employee would be low, as he may be taking into consideration the full deduction amount while calculating tax. Thus you may have tax liability at the time of filing returns. Not disclosing income from the previous employer may result in an income-tax notice as it will be spotted when the TDS data is being reconciled.
Revision of Income
If the income-tax returns have been filed before the due date (July 31), tax payers are entitled to submit a revised return in case of any error or omission therein. However, the revision is not permitted if the returns are filed beyond the due date. Precautions taken at the time of filing returns will prevent hassles later. To make sure you file your returns before July 31, start the process now — Procrastination is the thief of time!
(The writer is CEO of bankbazaar.com. He can be contacted at adhil.shetty@
bankbazaar.com)
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A reader asks
A reader has raised some points about last week’s Money Talk. Our columnist responds.
Q) Is not advance tax applicable where tax payable exceeds Rs 10,000?
A) No, it is applicable when it exceeds Rs 5,000 in accordance with Section 208 of the Income Tax Act.
Please refer www.income [1] taxindia.gov.in/acts/income%20tax%20act/208.asp
Q) Book Keeping: “If the gross receipts are less than Rs 1.50 lakh, the assessee has to maintain his accounts.” Is this really the case?
A) This is in accordance with Rule 6F of the income tax law. (http://law.income [2] taxindia.gov.in/DitTaxmann/IncomeTaxActs/2006ITAct/Rules006f.htm) Here, (when its less than Rs 1.50 lakh) the business owner just needs to maintain accounts assessing which the IT officer can figure out his taxable income, whereas if it exceeds this sum, then he needs to maintain other records like cash book, ledger, bills etc. as specified in Rule 6F of the income tax law.
Q) “If the gross receipts exceed Rs 1.50 lakh, the assessee has to maintain books of accounting like the cash book, journal, le-dger, copies of bills excee-ding Rs 25.” This is not clear as there are two separate limits — one for his own receipts and the other for expenses incurred.
A) Here it refers to bills issued by person according to Rule 6F of the Income-Tax law for the purpose of taxable income calculation. Kindly note the difference in usage of receipt and bill. Bill always refers to an instrument issued, while receipt is an instrument received. If its an expense then the word “receipt” would have been the appropriately used, which has a different limit of Rs 50.
Links:
[1] http://www.income
[2] http://law.income