Philosophy teaches a man that he can’t take it with him; taxes teach him he can’t leave it behind either. ~Mignon McLaughlin, The Second Neurotic’s Notebook, 1966
Now that Income Tax return filing season is at its feverish pitch, and everybody has swung into action, I thought of making you aware of the last minute dos and don’ts so that you hit the bull’s eye in single shot. It is very important to verify certain details before you finally sit down to prepare the returns. Even if you are not filling your returns this July, you should have a look at the facts you need to verify.
Verify the following documents:
Have a close look at the Form 16 issued to you by your company to ensure that your PAN mentioned is correct along with the assessment year for which it has been issued. Also, it is important to check that the allowances paid to you, which are exempt, have been shown as exempt in the said form.
Do not forget to verify that all the deductions made under Section 80C and 80D etc. allowed from your income, as form 16 are electronically generated and are in lots, there is a possibility that the mistakes are not noticed by the accounts department and you may miss the filing date if you have not noticed it earlier. The possibility of the exempt allowance being shown as taxable and admissible deductions not considered in the form no.16 is higher in case you had submitted the proof of such items at the fag end of the accounting period. Consequently higher tax deduction has been done from your salary.
This is absolutely important to verify the details in form no. 16 as your Chartered Accountant will rely on the figures mentioned in the form and may not realize that some exempt allowances have been treated as taxable. In case, you have spotted any such discrepancy, immediately approach your accounts department to make the relevant correction / change in the form no. 16..
In respect of excess tax deducted, since the tax has already been deposited by your employer to the credit of the Central Government, the only course left open to you is to claim refund for the excess tax deducted from your salary in the return of income being filed now.
Nowadays you cannot attach any document with the return of income, hence you have to preserve the supporting documents in case these are needed in future. So the credit in respect of tax deducted at source is given to you, based on the data available with the income tax department. This data is collected by the income tax department through returns of TDS filed by the deductor of tax. In case of some mistake on the part of either the bank or the deductor, the proper credit for tax deducted at source is not reflected in the data available with the income tax department.
To facilitate the process further, the income tax department sends the tax payers a form no. 26AS through email, containing the details of all the taxes credited in his account. The tax credited to your account as shown in Form No. 26AS includes tax deducted at source, tax collected at source and all the taxes paid by you either as advance tax or self assessment tax. Please verify that all the tax deducted/collected/paid by your are correctly reflected in such statement.
Hence dig out your inbox and take out the Form no 26AS which you had ignored earlier and verify the details of tax credits with records available with you. In case of any discrepancy, please take up the matter with the concerned deductor and ensure that the errors are rectified and right tax credit is reflected in the form no. 26AS. This will ensure that you will get a proper credit for the same by the time processing of your tax return is taken up by the department.
You can also get access to your form no 26AS in case you are not able to find out the old form received from the Income Tax department. Please visit the link https://onlineservices.tin.nsdl.com/TIN/PanRegistration.do to register yourself for accessing your form no. 26AS.
Another often ignored aspect I would like to highlight is of Capital Gains Account. You should open this account before 31st July 2010 in case you have sold some long-term capital assets and planned to avail tax exemption by reinvestment. These could be long- term capital gains on the sale of residential house, where you have the option of saving your income tax by investing the capital gains for purchase or construction of another house property within a specified period. Likewise if you have earned long- term capital gains on other assets you can save your income tax by investing the net consideration in another residential house property.
However if you have not been able to utilize entire capital gains or whole of the net consideration as the case may be for purchase or construction of another residential house property before you file your income tax return, you are required to deposit the unutilized portion of the money in the capital gains account with specified bank before you actually file your return. However, if you are not able to file your income tax return by the due date applicable in your case then at least ensure that you have deposited the un utilized portion of the capital gains on house property in the capital gains account.
Like wise if the long-term capital gains arose on sale of assets other than a residential house property, you have to deposit the proportionate net consideration in the capital gains account before you file your income tax return. However deposit in the capital gains account cannot be delayed beyond the due date applicable in your case.
So ensure that you have deposited the propionate net capital gains or net consideration before you actually file your return. Do not forget to deposit the requisite money in the capital bank account by 31st July even if your are not planning to file your income return by 31st July this year for any reason.
To conclude here, I would also like you to verify your salary and TDS certificates and ensure that all the taxes paid by you or on your behalf are duly reflected in the records of the Income Tax department.
For any other issue related to tax filling, please feel free to reach me on the email ID mentioned.
(Balwant Jain is a CA, CS and CFP. Presently working as Company Secretary of Bombay Oxygen Corporation Limited. He can be reached at firstname.lastname@example.org)