DIY or do it yourself is the buzz word. Many individuals like to file the returns themselves through various online portals. Not only are these convenient but quite reasonable in comparison to the cost that one would have to pay if a chartered accountant was to be engaged. The process of filing through these online service providers is quite ease. The automatic calculators and the step by step guide helps one to file the return in a few minutes only.
Following is the list of such tax related misconceptions that would help in processing an error free tax returns.
E-filing process is complete once the return has been files
This is the biggest misconception. Just submission of the return online is not the end of the process. Assesse’s signature are mandatory. Now there are two options for one to complete this process. Either one can obtain digital signature prior to filing the return and submit the digitally signed papers. In case one does not have the digital signatures, the manual process can be followed. A duly signed printout (in blue ink) needs to be sent across to the processing center at Bengaluru. Note, the filing is incomplete without this process.
Tax on interest income
Most of the salaried people have a savings account. Each bank pays the account holders an interest on the amount maintained in the account. The amount definitely is small considering that the interest is only about 4% on an annualized basis. But, irrespective of the quantum of amount, the same is deemed to be an income and must be declared while filing the return.
Some people also have deposits with the bank and since the banks do deduct a standard tax from the interest paid, people have misconception that it does not need to be mentioned. The fact is that the actual tax may be higher than the tax deducted at source depending upon the income of assess.
Previous employer or income from other sources does not need to disclosed to current employer
There are job switches and most of the times, the individuals fail to share the earnings from previous employer with the current. To be able to have the correct tax deducted, it is important that this should be done. By taking the part of financial year’s earnings, the current employer will be able to apply correct tax slabs. Deduction of applicable tax will only lead to correct tax filing.
Higher tax slabs impact the credit score
This is a pure myth. The credit score has got nothing to do with the income or the tax that one pays. So if one has had default in past and is unable to get a loan for low CIBIL score, paying higher tax or declaring a higher income will not help at all.
Monetary gifts are not taxable
Any gift over the value of Rs 50,000 will attract tax and need to be discussed. Most of the individuals feel that money received from parents or immediate family and or from a charitable organization does not need to be declared, while the income tax norms want these to be accounted for while calculating tax liabilities.
Cannot claim HRA if not part of salary component
Even if there is no HRA component in the salary, the employee can claim the tax benefit under section 80GG. One can claim the exemptions if the same is filed under form 10BA.
Home loan deductions
Home loans also come along with tax benefits. This possibly is known to all borrowers. However, there are scenarios that one may not be aware of. In a situation where the individual is running two loans on different residential properties, he can claim tax deductions on both. Also, in case of joint loan, the co-borrower is also entitled to seek benefits.
Only primary account needs to be disclosed
A big mistake that leads to issues for assessee at a later point of time. There have been so many instances where the individual has found himself paying penalties for not disclosing all accounts and earnings from them. Please note that any account other than the salary account also needs to be reported and even if there has been a credit of a rupee, as interest, in whole year, would need to be included in the income.
Take due care of the above to avoid erroneous returns and penalties imposed on account of non-disclosure.
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