Balwant Jain of Apnapaisa.com lists out dos and donts to be kept in mind while filing your income tax returns. He stresses on verifying documents related to Form 16, PAN details, TDS credit and so on.
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. There are certain things which you should do before the due date even if you are not filling your returns this July.
Verify the following documents:
Have a close look at the Form 16 issued to you by your company to ensure that your permanent account number (PAN) as well as the assessment year mentioned on it is correct. It is equally important to verify that 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 claimed under Section 80C and 80D are properly allowed from your income. As form 16 is electronically generated in huge batches, there is a possibility that the mistakes are not noticed by the accounts department. 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 16 is higher in case you had submitted the proof of such items at the fag end of the accounting period.
Consequently higher tax might have been deducted from your salary. Moreover since only part A of the form no. 16 is only generated by the Income Tax department containing details of TDS paid and credited and as the details of component of your income are prepared by your employer in Part B of form no. 16, it is very important for you to verify it minutely.
It 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, 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. The tax may have already been deposited by your employer to the credit of the Central Government,
Since you cannot attach any document with the return of income and you have to preserve the supporting documents in case these are needed in future, so the credit 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 and by the banks for the payment received by them. 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 your account with the data available with the income tax department.
Your can view your tax credit in your account in form no. 26AS which is available online. The data 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 you are correctly reflected in such statement.
You can get access to your form no 26AS either through your online net banking login in case your bank has entered into such arrangement the income tax department. All the leading banks have such facility. Alternatively you can view your form No. 26 AS through the following link after registering https://www.tdscpc.gov.in/app/login.xhtml
Opening of capital gains account for unutilized capital gain
Another very important aspect often ignored is of Capital Gains Account. You should have opened this account before July 31, 2010. This is in case you have sold some long-term capital assets and plan to avail tax exemption by reinvestment in a residential house within the prescribed time when the money has not been utilised for this purpose.
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 the whole of the money planned to be invested out of the net consideration for purchase or construction of another residential house property before you actually file your income tax return, you are required to deposit the unutilized portion of the money in the capital gains account with specified banks.
But, 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 unutilized 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 actually file your return but not later than the due date of filing of your return. So do not forget to deposit the requisite money in the capital bank account by July 31, even if your are not planning to file your income return on that date.
One should also verify the 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.