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Things to keep in mind when you file tax returns
Finance - Tax Planning

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 IT 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 hassle free refunds.

Filing tax returns is an annual mandate that tax payers have to comply with, the last date for which is in sight i.e. July 31st, 2010. In a haste to meet the deadline, make sure you do not miss key elements that can cause trouble later.

Critical information should be 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 IT 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 hassle free refunds.

Safe keep all relevant documents for future use

The IT 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 doesn’t meet that you can put away the documents carelessly. In case of scrutiny, the tax authorities may need supporting documents for verifying the claims made in the return.

Disclose exempt income and investments made

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 IT laws. They include

  • 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 a previous employer

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 in to 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 IT return has been filed before the due date i.e. 31st July, tax payers are entitled to submit a revised return in case of any error or omission therein. However, revision is not permitted if the return is 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 the 31st, start the process now- Procrastination is the thief of time!

 
 

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