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Income tax filing is one of the most important for income earners. Most people do not know what to avoid and some can easily think that it can be avoided. Especially, first time income tax payers are likely to make a lot of mistakes.
A taxpayer should also ensure that ITR data is in sync with that of Form 26AS. In case of any discrepancy, the income tax department could issue notice, seeking explanation for discrepancies in the figures of income or TDS appearing in Form 26AS and income tax return. Form 26AS is basically a consolidated tax credit statement that has all details of various taxes deducted on your income at source. Form 26AS can be accessed from the tax department’s website.
If you have changed jobs during the year, you have to report income earned from all the employers in your tax return. Further, if any income of your minor child or spouse is required to be clubbed with your income then you have to report it as well.
Earlier, there was a rebate available for individuals earning annual income up to Rs 3.5 lakh. The total income threshold has now been increased to Rs 5 lakh per annum, resulting in an increase in the tax rebate from Rs 2,500 to Rs 12,500. As the benefit is applicable to individuals having net taxable income up to Rs 5 lakh, this would cover individuals having gross annual income of well over Rs 5 lakh, depending upon the applicable tax deductions.
Senior citizens aged 60 years or above but less than 80 years with an income of up to Rs 3 lakh are exempted from paying tax. However, income between Rs 300,001 to Rs 5 lakh will be taxed 5 per cent, while income from Rs 500,001 to Rs 10 lakh will be taxed at 20 per cent and those above Rs 10 lakh will be taxed at 30 per cent respectively.
Super senior citizens (aged 80 years and above), with an income of up to Rs 5 lakh, will be exempted from paying tax. While income between Rs 500,001 to Rs 10 lakh will be taxed at 20 per cent, those above Rs 10 lakh will be taxed at 30 per cent.
Interest income from Savings account and Fixed Deposits are Taxable. It is important that you disclose information about each of your foreign income and assets. You must also specify your bank accounts, start date, interest earnings.
Similarly, you can get demand notice in simple calculations, in which you are asked to repay the outstanding tax. However, in such serious mistakes, you will not only need scrutiny assessment but also impose a heavy penalty on you.
Until last year, you had to fill a figure in ‘income from other sources’. Now, from now on this year, you will have to tell the income, bank accounts, income tax refunds and pass-through income separately from your deposit (FD and RD) separately. This means that you cannot hide income from any kind of income or interest in your returns.
There are many detailed disclosures in the new ITR form, so you must gather all your bank account statements, financial transaction records and documents related to foreign assets before filing returns. You can be penalized if you lose any information related to income.
This is the first year when taxpayers have to report long-term capital gains (LTCG) from equity investment. 10% tax will be levied on LTCG of more than Rs 1 lakh in a year. Information about these gains is to be given in Schedule CG, Section B4. You do not have to report the information of the date or whose name has been transferred to Scrutiny, but the exact value of the total value, the price market value (FMV) and the cost of the acquisition will be disclosed. You can easily get the information on the statement of capital gains from your broker or mutual fund house.
From 1 June 2013, if a person buys real estate worth more than Rs. 5 lakh, then the seller will have to deduct 1% TDS from the money received and the seller has to deposit it in government account. However, you cannot save taxes by just paying by the time. Experts say that every year many notices are issued to taxpayers due to disturbances in TDS calculation.
Every payment, in addition to the final payment, includes advance payment, TDS is deducted. This is the thing where most taxpayers make a mistake. In case of multiple installments, you will need to deduct TDS on each payment and within 30 days of the deduction date; it will be paid by Form 26 QB.
You also have to obtain the correct PAN details of the seller and at the time it has to issue Form 16B. Deposit or filing of any form will not only get you notice but will also be charged and you will have to pay late fees according to 200 rupees per day. In the event of more than 1 seller, you will have to deduct TDS for payment made to every seller and for everyone, submit form 26QB separately.
In 2017, the government made mandatory TDS deduction for all salaried and Hindu undivided families. Earlier, only those people had to pay TDS on their rent, whose accounts were audited under tax law. If you pay the rent of more than Rs 50,000 every month, you will have to deduct 5% of TDS from the rent given to the landlord and it will have to file till the end of the financial year. TDS is not a deduction; it is not to comply with tax law. The tax filer can be equal to the equivalent amount of TDS amounts.
If for a few months the rent was more than 50 thousand rupees and in less than 6 lakh rupees in one year, you do not file a TDS after assuming the minimum limit. However, if the landlord will give information about the income from the rent in his return, you will come under the scanner.
So far the IT department was dependent on the information provided by the bank for information on high-value transactions (AIR), credit card companies, mutual funds and registrars (for real estate deal). Following information from social media, it will be easier for the authorities to validate AIR information.
Credit Card Company keeps records of high-value transaction expenses and can give information in AIR. Or maybe you have received a big gift and you have forgotten to give it information in return. Such expenses may increase the doubt of the IT department, but do not need to worry if you have proof documents.
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