Niraj Mahajan
The Article aims at creating awareness amongst salaried employees about various tax compliance and possible tax planning over the year. We are in the month of July wherein the last financial year (FY) 2017-18 has gotten over and due date to file Return of Income (i .e, 31st July ) stares in the face.
Article Aims to provide solutions for tax savings and awareness of tax benefits for FY 2017-18 and steps to be taken before hand for tax planning of FY 2018-19.
Most of the tax planning for Salary income can be done at the Salary Structuring (deciding the components of your Salary in most tax efficient manner) stage itself i.e. at the time when one receives his employment letter. Unfortunately, it is not a normal practice to allow employees to choose their Salary components. Nevertheless, let’s take a look at the advantageous methods to reduce your tax liability and a brief insight relating to the issues of Income-tax on Salary.
Form 16 is a Certificate of TDS (Tax deducted at Source) i.e. tax deducted on your Salary by your Employer and deposited with the Government on your behalf.
It reflects the details of your Gross Salary, the exempt allowances, your Other Income if any, details of Investments made and deductions availed. Thereafter, your tax liability, TDS made, and tax payable/refundable (If any).
Form 16 needs to be compulsorily issued if tax is deducted on your Salary. It is the responsibility of the Employer to issue Form 16.
As per law, Form 16 for FY 2017-18 needs to be issued to employees by 15th June (Being within 15 days of filing of Quarter IV E tds Return).
How do I confirm the TDS shown in my Form 16 is actually correct?
It is the prime responsibility of the Employer to furnish accurate details in Form 16, failure of which attracts penalty to the employer.
Nevertheless, tax authorities recently have empowered the deductees (Employee on whose Salary TDS is made) to cross-verify the TDS details against the records available with the Government.
Tax Information Network (TIN; a division of the Income-tax department) has introduced in recent years, the Form 26AS wherein any tax deducted at source on any of your income is reflected. Thus, you can cross-verify whether the tax that has been deducted is actually paid to the government or not?
It is compulsory to file my Return of Income?
Yes. As per the Income-tax Act, every person whose Gross Total Salary exceeds the basic exemption limit has to file a Return of Income
(ROI). Failure to file the Return of Income can expose to a penalty of Rupees Five Thousand u/s 271F
However wef from A.y 2018-19 Penalty u/s 271F shall be replaced by late filing fees U/s 234F. The assessee shall be liable for late filing fees under section 234F from A.Y 2018-19 onwards. The late filing fees is explained in table below:
| Serial No. | Date of Filing Return | Amount of late filing fees u/s 234F (Rs) |
| 1. | If the return is filed after the due date but on or before 31st December of the assessment year | 5,000 |
| 2. | If the return is filed after 31st December of the assessment year | 10,000 |
However if the total total income does not exceeds Rs 5 lakhs the amount of late filing fees shall not increase Rs 1,000.
Also, the laws do not permit payments of your Refunds (If any) when the Income Tax Return is not filed.
It is a good policy and a willful conduct to keep your financial and tax records updated so that you do not have to face hurdles while applying for Business loans, Home loans, Insurance policies, etc. Filing of Income tax Return should be seen as a good habit and not as compliance burden.
By when I have to file my Return of Income?
For salaried individuals the due date of filing of Tax Return is 31st July, 2018 for the FY 2017-18.
I have not filed my earlier years Income-tax Return. Can I file them now?
Yes. You can file Income-tax Returns of earlier years as well. That means if you had not claimed your Refund of last year due to non-filing of Income-tax Return, you can still do it now.Wef A.Y 2017-18- If the Return is not filed within the time limit mentioned us section 139(1), still the assessee can file its return at any time before before the end of the relevant assessment year or before completion of assessment, whichever is earlier,
I had not submitted few Investment proofs to my Employer. What do I do now?
The Employer is under obligation to consider all Investment proofs provided by you. However, if you miss on providing any details/proofs you can always claim the investments in your Income-tax Return and claim your Refund, since your Employer has already deducted the extra tax on the investment-portion for which you had not provided the proofs.
How do I reduce my tax liability?
There are many many Investment options which reduce your tax liability.
Section 80C provides you relief till Rs. 1.5 lac. Various Investments/expenses enumerated under Sec. 80C. They are listed below:
- Life Insurance premiums ( of self and family)
- Provident Fund contributions (of self and family)
- Mutual Fund contributions
- Public Provident Fund (PPF)
- Tuition Fees (of self and family)
- Principal portion of EMI of the Housing loan
- Fixed Deposit with Banks for 5 years
- NABARD and other Bonds / Certificates as specified from time to time.
Following are additional deductions which are over and above the Rs.1.5 lac limit as mentioned above:
- Health Insurance premium up to Rs.25,000/- (under section 80D)
- Full Interest on Education loan u/s 80E
- Donations u/s 80G
- Interest portion of EMI of Housing loan up to Rs.2 lacs (section 24). (Consequently, benefit can be availed on the principal and the interest expenses.)
How do I get maximum benefit of HRA?
House Rent Allowance is exempt the least of the following:
- HRA actually received
- Rent paid in excess of 10% of Salary
- 50% of Salary (Rent paid in Metro City) or 40% of Salary (Non-metro city)
Salary here means basic salary and includes Dearness Allowance if the terms of employment so provides. It also includes commission based on fixed percentage of turnover achieved by the employee as per the term of employment contract.
How does my House Property Loan help me in tax savings?
Repayment of house loan can be bifurcated in 2 parts:
- Principal amount allowed till Rs. 1.5 lac u/s 80C
- Interest amount allowed till Rs. 2 lacs u/s 24
If you have House loan on more than one property, the interest repaid on second home is exempt without any limit.
I had switched my employment during the year. What about my TDS made by earlier Employer?
It is the responsibility of the employee to furnish to the new employer the details of Salary and TDS made thereon by the previous employer. Only if such details are furnished, the new employer shall take into account the salary and TDS details and calculate TDS to be made in future accordingly.
How do I file my Return of Income?
For an individual ( total income does not exceeds Rs 50 lakhs ) having income from salary/one house property ( not being brought forward loss from previous years) /or Income From Other Source( not being loss and not being winning from lottery/or income from race horses) need to file their Income-tax Return in Form ITR-1.
This may be submitted online. The benefit of submitting the Return online is that the Return gets processed quickly, thereby reducing your wait for Refund amount.
Prepared by – Niraj Mahajan, Tax Adviser, Email: canirajmahajan@gmail.com, M: 98 600 92 752
(Republished With Amendments)
There is no ITR for pure Salary cases and the Form ITR 1 having the clause of Houseproperty which have the options of Letout and Self Occupied.If the only salary assessee entered as letout otherthan a way the portal generates the message as the let out value shall be more than o.Please clarity this?
1. Basic exemption limits are Rs. 1,80,000/1,90,000/2,50,000 not Rs. 1,80,000/2,10,000/2,50,000 as written
2. Section 80C allows tution fee deduction only for two children. Not for self and family.