Skip to main content

Filing I-T Returns

 


Two out of three taxpayers don't know the tax rules and could be filing faulty returns
 
Filing your tax returns is very easy, but make sure you know the tax rules. The returns of almost 66% of the 2,158 respondents could have faulty information and almost 34% could even get a notice because of the errors in their tax forms.

Interest income is where many taxpayers are going wrong. Almost 30% of the respondents believed that interest of up to 10,000 from bank fixed deposits (FDs) is tax-free in a year. They should know that the exemption under Section 80TTA is only for the interest on their savings bank accounts. What they earn on fixed deposits and recurring deposits (FDs) is fully taxable. Similarly, almost 30% believe that the interest earned on tax-saving infrastructure bonds bought a few years ago under Section 80CCF is not taxable because they were tax-saving instruments. Wrong again. The bonds may have helped them save tax, but the interest is fully taxable and has to be reported. Nearly 45% of the 637 respondents who said so earn over 12 lakh a year and should be paying 30% on the income they think is tax-free. This is a common misconception. Our research shows that nine out of 10 taxpayers go wrong in reporting their interest income.

There is also a misconception that there is no need to report income on tax that has been deducted at source (TDS). But TDS is only 10% and if your income puts you in the 20% or 30% tax bracket, you have to pay additional tax. Of course, if the income is below the basic exemption limit, TDS will be refunded after the return is filed.

The other critical error is reporting income from a second house. Almost one out of five respondents believe there is no tax payable if a second house is lying vacant. Even if you haven't rented it out, you have to pay tax on the notional income based on the prevailing market rate in that location. From this year, the tax forms have a separate column for declaration of property and owners will not be able to avoid re porting them to the authorities. This rule about the tax on notional rent was always there. It is only that this year's tax forms have made it clear by providing a separate column for such property.

Taxpayers are also not clear about clubbing of income. More than 31% of the respondents believed there is no tax implication if they invest in a recurring deposit in their wife's name or open a fixed deposit in the name of a minor child. The income from such investments is treated as the income of the giver and taxed accordingly . Of the 668 respondents who got this wrong, more than 30% are in the highest tax bracket.

A significant 45% of respondents weren't clear about the mode of filing returns. Online filing is compulsory if income is above 5 lakh a year, you have foreign assets or are claiming a refund. Even if a physical return is accepted in the last-minute rush, it will ultimately be treated as an invalid return at the time of assessment. To be sure, not reporting a small amount of interest income or claiming a deduction incorrectly rank very low in the hierarchy of tax offences. At most, you will get a notice with an additional tax demand. There may even be a penalty under Section 271 (c) for concealment, but it depends on how the assessing officer views the transgression.

If the assessing officer is convinced that it was a genuine mistake and the taxpayer's intent was not to evade tax, he might not levy a penalty.

On the other hand, taxpayers need to extra careful about foreign assets. Uncovering black money is high on the government's agenda, and any slipup on reporting of foreign assets immediately puts you in the dock.

The logic used by the tax department is that anyone with foreign assets has high income and should not be spared if he has concealed income. To be sure, almost 89% of the respondents got this right. But that still leaves around 11% of taxpayers who might falter when it comes to declaring their foreign assets.

The department is keeping a close eye on accounts and assets held outside India. The new ITR-2 (income tax return form) requires you to give details of your foreign bank account's holding status (both as an owner and as a beneficiary), account opening date, interest accrued during the year and schedule and fields number under which the same income is reported.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Popular posts from this blog

Post Office Deposits Interest Rates

Best SIP Funds to Invest Online   SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further information on Top SIP Mutual Funds contact  Save Tax Get Rich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com

ELSS Tax Saver

ELSS Stands for Equity Linked Savings Scheme.   ELSS Fund are mutual funds with 3 years of lock in period and offer income tax benefit under section 80C. They are open ended to purchase. Not all Mutual fund Investments are eligible for tax exception. List of Tax Saving Mutual Funds   Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.   Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)   Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications   These Application Forms can be used for buying regular mutual funds also   Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds ) HDFC TaxSaver ICICI Prudential Tax Plan DSP BlackRock Tax Saver Fund Birla Sun Life Tax Relief '96 Reliance Tax Saver (ELSS) Fund IDF

How Tax Deducted at Source (TDS) works?

    THE tax season is here. And if you are an employee you can't blame your employer for deducting large chunks of money from your salary towards tax deducted at source ( TDS ), which he is legally obliged to do. Your bank will also deduct some percentage from your FD interest of Rs 10,000 or more towards TDS! So what is this TDS all about? How is it computed? Are there any changes this year? Read on... What is TDS? TDS reduces your taxable income and could even provide tax relief! The TDS collections account for 40 percent of the total taxes collected in the country. As the name suggests TDS is the amount of tax that is deducted at source in certain types of income . The TDS thus collected is deposited in the Government treasury within a specified time. How is it computed? Some of the types of income where TDS is applicable include salary, interest, rental fee, interest on securities, insurance commission, dividends from shares and UTI/Mutual Funds, commission and brokerage

Modern day balanced mutual fund approach

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India)   In reality, most balanced funds have a strong tilt towards equity instead of a mix of equity and debt THERE are various types of mutual funds available to investors with specific features. Often investors have a particular idea about a specific type of funds in terms of their features and risks, but that is not what is actually available. Therefore, it is necessary for an investor to understand the actual position before picking up a fund. This requires some work on the part of the investor. One example can be the situation with balanced funds. Name is not representative: One of the first things that an investor has to understand is that the name of the fund is often not representative of its investment pattern. The name often represents only the aim of the fund, and not what it actually is.

Should you invest in tax-free infra bonds?

THOSE looking to save tax should take note of the latest buzz in the debt markets. Power Finance Corporation ( PFC ) and Housing Urban Development Corporation (Hudco) have launched bonds that will help you save more tax than your regular infrastructure bonds. Soon, IRFC and NHAI are likely to follow suit with similar bonds. KP Jeewan, general manager, debt markets, Karvy Stock Broking, says: "The coupon in these bonds are completely tax-free and those in the highest tax bracket can expect an effective yield of 10.75 per cent, compared to the 9.5 per cent a 10-year public sector bond would offer." The PFC and Hudco offerings are of 10- and 15-year tenures, with coupon rates of 7.5 and 7.75 per cent, respectively. Unlike other regular tax-free infra bonds, the tax benefits in these bonds are not capped at ` 20,000. Even besides these tax free bonds, those in the highest tax bracket have had plenty of opportunities to invest in tax saving infrastructure bonds under 80 CCF i
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now