Are you biting relaxed to file your income tax return on or before due date? i.e. 31St July, thanks to talk of taxing season has been over. But it’s time to rethink and cross-check you were filed income tax return such as did you choose right ITR form, had you added all the income and taken into account all the deductions, should you be all paying advance tax and self-assessment tax, were you liable to pay interest on deferred tax and so on? This is because, coming September, the taxman would be proactive in searching out defaulters and geared to catch discrepancies in your return filing. Though, it can be scary if you are clueless about I-T scrutiny and implications of dreadful income tax notices, don’t need to be worried as once you go through this post, you could able to reduce the chances of inviting the income tax notices and keeping the tab on your tax burden to avoid penalties.

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Choosing right ITR form

If you filed your own tax return, you needed to be careful to select right ITR form as Income tax department is released many ITR form such as : ITR-1 (Sahaj) ,ITR-2 ,ITR-3, ITR-4 and ITR-4S(Sugam), ITR-5 and ITR-6 in every new assessment year. While choosing the right ITR form, you should, firstly have to assess your various sources of income such as salary, pension, and income from house property, capital gain tax, and agriculture income, interest income from fixed deposits and even exempted incomes. Sample this:, if you invested Rs1 lakh in tax free bonds which have coupon of 8% to 9%, in this case, you cannot file ITR-I (Sahaj) as the tax-exempt income will cross the limit of Rs 5,000, you will have to file ITR-2. Similarly, if you are getting both salary and pension from two separate employers, you should also have to choose ITR-2 instead of ITR-I which is the most likely every salaried tax payer has chosen by default.

Paying Advance Tax and Self-Assessment Tax

Most salaried employees have misconception that they need not to pay any advance tax as their employers have already been deducting appropriate TDS on their taxable income. But, it is critical that you pay attention to your advance tax obligations throughout the financial year. Apart from your salary and pension which are generally deducted TDS by your respective employer, you may still be liable to pay advance tax, if total taxes on income generated from various other sources such as bank fixed deposit interest, rental income, capital gain on selling asset etc. are above Rs10,000. In such case, you have to pay additional tax as advance on prescribed due dates are 15th September (30% of advance tax liability), 15th December (60%) and 15th March (100%) every year. If you fail to pay the advance tax on the due dates, you will be penalized by paying interest 1% per month for default in payment of advance tax and 1% per month interest payable for deferment of paying advance taxes. This will be included in your tax liability which will have to be paid as ‘self-assessment tax’ before 31st July.

Mismatching the tax credits in 26AS

Like saving pass book, 26AS is your passbook of tax credits which displays the gross amount credited/paid, tax-deducted-at source (TDS), advance tax, and self-assessment tax payment for which you can claim credit while filing your tax returns. You must receive your TDS certificates on salary sources in the Form 16 from your respective employer and TDS from ‘other than salary source’ in the Form 16A from your banker and other collector. Every taxpayer has to make sure that all TDS entries in Form 16 and 16A should reflect in Form 26AS such as gross amount, date of deduction and status of booking as flagged by ‘F’ i.e., ‘Final Status etc. with their bank and salary records before filing their tax return. If you find any discrepancies in your Form 26AS with your Form 16/16A, you must bring the notice to your respective employer and banker to rectify the same and ask to revise their TDS return as soon as possible. If you have already been filed the return with mismatching the tax credits in 26AS, you may get in trouble as opening yourself for an I-T scrutiny notice.

Disclose share of property in case of Joint Home Loan

For joint home loan and self-occupied home, it is imperative to disclose the share of property by husband and wife to avail the home loan interest deduction Rs 1.50 lakh ,which has, now been increased to Rs 2 lakh each one can avail Rs2 lakh interest component deduction. It will help you in case of your income tax assessment. In case, your spouse does not have any income, only you can claim up to Rs 2 lakh loan interest deduction irrespective of joint home loan. Similarly, you are receiving any rental income from your joint property, you can share your rental income in the defined ratio of ownership of the joint property, and else you can share the ratio 50:50 in respect of loan interest deduction, repayment of loan and receiving rental income, if any.

Tax Payable even Form 15G and 15H submit

Form 15G and Form 15H are used to permit banks to not deduct TDS even if the interest across fixed deposits exceed Rs10,000 in any financial year. Those who are in a taxable bracket, they should not submit 15G and 15H as it tantamount to tax avoidance. Some taxpayers have misconception that they don’t need to file their return and not to liable to pay any tax as they have already submitted Form 15G and 15H to their banker, they should understand that if, their fixed deposit interest crosses Rs 10,000 in any financial year, their 26AS will still reflect the same amount even though there is no TDS. The taxman can easily track the interest paid to you with or without TDS and can attract notice as well as penalty. While submitting 15G and 15H, it does not mean that you do not owe tax; you may still pay tax on based on your aggregated income during the year. Your fixed deposit interest across all banks/companies FDs need to be added to your gross income.

Disclose all exempted incomes

Interest from post-office savings is exempted up to Rs4,000, or Rs8,000 for joint accounts, PPF interest is tax-free, long-term capital gain on equity and equity related mutual funds schemes exempt under section 10(10A) and net agriculture income etc., need to be included in the exempt incomes while filing the return. Some other exempted incomes need to be disclosed such as dividend, transport allowance, house rent allowance (HRA), leave travel allowance (LTA) and uniform washing allowance as the list may not be exhaustive. Undiscloure, showing higher or lower amounts for tax-exempt income than allowable can lead to scrutiny of your income tax return.

Opportunity to Revise your Income Tax Return

In an early to meet the deadline, you might have overlooking certain deductions, forgotten to disclose some incomes, mismatching any tax credits in 26AS etc. In such a case, the Income-Tax Act, 1961, is hereby to offer you an opportunity to revise your tax return under section 139(5) of the IT act, provided the omission of wrong disclosure in the original return was due to a bona fide and inadvertently mistake. According to this section, you can revise a return within a year from the end of the assessment year or before completion of assessment whichever is earlier. Hence, revised return can be filed by March 31, 2016, or before completion on assessment, whichever is earlier, for FY14. Lack of awareness, over-enthusiasm to get higher deductions, using colorable devices to save taxes, not paying owe taxes may result tax avoidance and evasion leads to you get in trouble literally compound your interest, penalty and in some cases, it could also lead to imprisonment., which you cannot imagine.

In case there are any complexities and ambiguities in your incomes, deductions, tax payments, you must hire a tax planner who will provide expert advice online/offline are less likely to get a notice because the compliance requirement is being managed by a professional who could save your cost, a lot of time, money and peace of mind.

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Suresh Kumar Narula

SEBI Investment Advisor, Founder & Principal Financial Planner at Prudent Financial Planners
Suresh K Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner's Guild, India. He is also a member of Financial Planner's Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in
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