It is that time of the year again when tax payers - particularly the
salaried class - scramble to file I-T (income tax) returns.
After all, filing of tax return is compulsory for everyone whose gross
total income exceeds the basic exemption limit.
For financial year 2007-08 (assessment year 2008-09), for instance,
this limit was Rs 1.45 lakh for women below 65 years of age, Rs 1.95
for senior citizens and Rs 1.10 lakh for any other individual. If your
income for the year exceeded the exemption limit, you will be required
to file the return by the due date (July 31, in this case).
However, despite all the precautions taken by you, rush-hour filing
may mean that you could inadvertently miss out on certain details and
disclosures, and therefore be on the bad books of the taxman.
If not that, you might just forget to make the most of the tax breaks
available to you, thus paying more tax in the process and claiming no
or less return. Here are 10 important things to do before filing your
I-T returns:
The first thing to do is to see that you have chosen the right form to
file your return. For example, there are two I-T return forms -- ITR-1
and ITR-2 - available for salaried individuals at the moment, and your
sources of income will decide which form to use.
Use the first form if your income is from salary, pension or interest,
and use the second one in case of any capital gain, income or loss
from house property and income from any other source.
The Tax Department will refuse to accept your form in case you have
chosen the wrong form.
Ensure that you fill in correct personal details in the form meant for
you, especially your name, address, bank account details and PAN
number.
Bank account details include the bank account number, type of account
and the bank's MICR code. This is crucial, especially if you are
claiming a refund.
Likewise, your PAN is very important because the tax laws levy a fine
of Rs 10,000 for not quoting or misquoting your PAN number.
Check that you have already received your Form -16, i.e. certificate
of tax deducted at source by the employer on your salary income. The
original Form-16 will have to be deposited with the I-T return form.
Similarly, "if any tax has been deducted by bank on interest or any
other party on the payment made to you, then you will have to obtain
Form -16A, i.e. certificate of tax deducted at source on rent,
interest etc," informs Vikas Vassal, executive director, KPMG.
Ensure that you have analyzed your bank statement as to any income
received or any investments made, that are required to be disclosed in
your tax return.
"A common mistake most salaried tax payers tend to commit is the
exclusion of interest income. Your assessing officer doesn't have to a
genius to guess that any person who maintains a savings/deposit
account would normally also receive interest income and not disclosing
the same may.Therefore, be one sure way to get discomforting
correspondence from the tax office," says R K Chopra, V-P (Finance),
Alankit Assignmets Ltd.
Ensure that you have computed your tax liability, including your
salary income, and "if any tax is payable, the same has been paid as
'self assessment tax' before filing the tax return.Further, if any
interest is payable for late payment of tax, then the same has also
been deposited," says Vassal.
Check whether you have correctly filled in details of your salary
income/other income and also the tax deducted at source in the
relevant columns of the tax return form to ensure that you get the
credit for TDS.
Don't miss on the details of your stints with stocks last year.
Note that even if the markets haven't been kind, the loss would be
allowed for carry forward for luckier times in future for setoff only
if the same has been appropriately been disclosed in the form.
Ensure that you have, under various sections of the I-T Act, claimed
all the deductions that you are eligible for. For example:
a. Under Sec 80 C - For investments made like PF, PPF, NSC, school
tuition fees of children, insurance premium investments in specified
mutual funds etc.
b. Under Sec 80 G - Donations made to charitable organizations.
c. Housing deduction for interest on housing loan etc.
You also have to fill in information in respect of specified
investments, as per prescribed limits, such as:
Property bought or sold in excess of Rs 30 lakh
Mutual funds, in excess of Rs 2 lakh;
Cash deposits in excess of Rs 10 lakh;
Credit card payments in excess of Rs 2 lakh;
Bonds etc in excess of Rs 5 lakh
It is also important to know that certain income that is exempt (i.e.
income which is not taxable) is also required to be disclosed in the I-
T return form.
For example, dividend received and receipt of PF balance, among
others. Not disclosing these incomes may land you in trouble also.
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