FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
Filing returns? Here is a checklist!
The end of July rush is the expected norm every year, when tax returns need to be filed! Most people wake up to the need of filing income tax returns only around this time! The IT department has over the years introduced many measures, which take advantage of the available technology to make the process of filing tax returns as simple as possible. However there are still some areas that require particular care so as to avoid common mistakes in the returns. Online filing of taxes is the most convenient means, which is rapidly gaining acceptance among the tax payers. Additionally there are help booths and kiosks from the IT department as well as private agents who can help you file returns in case you are not tech savvy. A little care and caution while filing the returns will ensure that you do not commit some of the common mistakes detailed below.
One: The Right Form
There are a variety of ITR forms, which may create confusion when choosing the one for your requirements.
- ITR-1 (Sahaj): This is to be filled by people who have salary, pension, rental income from single property, tax free capital gains and even income from interest.
- ITR 2: This is applicable for individuals as well as HUF with salary, pension, income from single property, tax free capital gains, income from interest and foreign assets.
- ITR 3: This applicable for people in partnership firms with salary, interest, bonus, commission, income through capital gains and income from more than one property.
- ITR 4: This is applicable for individuals as well as HUF who have income from business/ profession with gross receipts of more than Rs. 60 Lakhs per annum. (Even if the gross receipts cross Rs. 60 Lakhs while the total income remains below 8% of that amount , ITR 4 is to be used for filing returns)
- ITR 4S (Sugam): This is applicable for individuals and HUF with income from business/ profession with gross receipts up to Rs. 60 Lakhs per annum.
- ITR V: This is not form 5 and is ‘V’ which is an acknowledgement form to be filled for all the categories discussed above.
Two: Typing Errors
Despite the fact that online filing of tax returns allows very little scope for typing errors, there are chances that one may overlook this aspect. Any typing error can have serious ramifications in terms of delaying the refunds if any is being claimed in the returns. In fact it may even result in the non acceptance of the returns and any subsequent correspondence on the returns may not be entertained by the department.
Three: Crosscheck with Form 26AS
Many people are not even aware of this form. Mostly salaried people are concerned with the Form -16 or Form- 16A which they get from the employer as a statement of taxes deducted from source by the employer. There may be cases when the employer has due to an error not reflected all the TDS from your income in the PAN card. The PAN card entry may also be erroneous at times which lead to subsequent complications in the tax calculations by the IT department. The details have to be cross checked from the Form 26AS which will also have an account of the income from FDs in case you have any.
Four: Filling Tax Saving Deductions
This yet another grey area where many people tend to make mistakes. All investments done to save taxes prior to 31st March of that year must be accurately reflected in the columns provided for them. Some common errors in filling these details are:
- Adding employer’s contribution to PF for deduction under Section 80C. It is only the employee contribution that is eligible for deduction under 80C.
- Many people add the entire amount paid in home loan EMIs for rebate under 80C and 24B. Only the amount contributing towards the principal of the home loan qualifies for rebate under 24B.
- Elements such as repayment of educational loan and donations towards charitable institutions are exempt under Section 80E and 80G respectively which many people fail to indicate in their returns.
Five: Acknowledgement Form
Failing to attaché the Form V or the acknowledgement form along with the ITR is a very common mistake that is observed in many cases. The IT department will not accept returns that are not accompanied by the Form V. Additionally for those who are E-Filing returns without an electronic signature; the physically signed Form V must be sent by post to CPC Bangalore to reach within 120 days of filing the returns online. Without this part the returns will not be considered to be complete.
Filing income tax returns is a relatively simple affair these days. However in case of any doubt it is advisable to seek professional help to ensure accurate filing so as to get the refunds due in time without hassles.