Vikrant is a salaried individual. He has few investments from his savings. He has been receiving SMS from tax department reminding him to file ITR on time. Vikrant feels that Form 16 issued by his employer is more than sufficient to file his ITR. But he has also heard about jargons like AS-26, AIS, TIS etc in the past few days and is a bit concerned if he is barking on the wrong tree.
“Seivana thirundha sei”
Aathichoodi
This is a popular tamil quote which comes to mind while thinking about Vikrant’s scenario. It means – when you decide to do something, you might as well do it perfectly to avoid any negative repercussions”. It would be good to remember this while filing the ITR as any careless or incorrect declarations might land you in trouble.
Common pitfalls while filing your ITRs
- Reconciliation of Income
- Advance Tax & TDS
- Exempt Income
- House Property Income
- Details to be updated in tax portal
Reconciliation of income
Form 26AS is a tax passbook, where an assessee can find the amount of income and tax deducted on the same. It also gives information on advance tax paid against a PAN.
While Form 26AS reflects correct information in most cases, it is prudent to reconcile the income reflecting in 26AS with the actual income and TDS deducted as per the assessee’s records maintained/information available. A difference between the income / tax numbers would trigger a notice.
Apart from 26AS, the Income Tax department has also enabled an assessee to extract the AIS from the income tax portal. One should ensure that information in AIS is also validated and considered while filing the ITR.
Advance Tax & TDS
Tax is deducted at source by the employer based on salary income and any other income disclosed to the employer. While it is possible to pre-empt income / loss from house property, it is not possible to do the same with respect to dividend income, interest from Bank deposits / SB and capital gains on sale of shares.
While filing ITR, one must remember to collate this information, declare the same and pay the due taxes before filing ITR. Not declaring these other sources would trigger a notice the income tax department.
Exempt Income
Income Tax Act 1961 exempts certain income. But this exemption does not relieve the assessee from not declaring it in the income tax returns. The ITR forms have a specific schedule – EI for declaring exempt income.
Maturity proceeds from EPF, PPF and gift received are some of the incomes which are exempt under the Income tax Act 1961. Not declaring exempt income could result in a problem in justifying the same at a later date when the department comes up with queries a few years later.
House property income
With the recent change to the provisions of the Income Tax Act 1961, an assessee can claim two house properties as self-occupied properties. But any other property beyond this, even if it was not let out during the financial year, should be declared in the ITR as a deemed to be let out house property – i.e there is tax on the notional rent. Due care should be taken to declare the same.
Details to be updated in the Income Tax portal
Once the returns are processed by the Income Tax department, communication on the same would be delivered to the mobile number and email id registered with the Income Tax department. Due care must be taken in updating the latest mobile number/mail id to ensure important information / message from the tax department is not missed out.
Further, updating the portal with the correct Bank details and getting it pre-validated is key to receive your refunds (if any) from the department.
How can we help you?
Various clauses from the Income Tax Act may be simplified in online contents. But most of the time, it requires professional help in identifying suitable route for specific instances. Similar to nurturing and taking care of personal health, it is important to also keep a tab on one’s financial health. We at Chockalingam Unnamalai & Associates, can help you understand the pros and cons of various choices you make in the context of personal taxation. You can bank on us for a stress free tax filing and related compliances.
Call us at +91 73050 56628 or drop a mail to frontoffice@onesourcevault.com
ITR Filing – Why choose us?
Effective compliance is a key pillar for growing your finances and career/business. Tax compliance in particular could be cumbersome and at times very stressful. We help you to navigate through the maze of changes to tax laws with ease.
We understand and operate on the principle – “Time is money”. We have a reasonable turnaround time (TAT) which ensures timely tax compliance.
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