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10 points to know about filing income tax return of salaried employees

 

Tax filing for the financial year ending 31st March 2015 has begun. So, I thought of listing out some of the important, but unconventional points in this article. Hope this helps.

 

Drop box First and foremost, create an account in dropbox, google drive or similar cloud based storage space. One of the most difficult tasks is paperwork, isn’t it? The main reason for late filing of returns is delay in compiling the data and documents! Drop box is the best place to compile the data. You can create multiple folders in it. For example, you can create a folder Income Tax 201415. You can store all the relevant documents in it. The important documents which you can store are –

  • Consolidated Salary Statement
  • Bank Statement
  • Form 16, 16A
  • Form 26AS
  • Employment contract
  • Proof of rent (agreement, rent receipt) etc
  • Proof of tax saving instruments such as ELSS statement, Bank FD receipt, PPF statement, etc
  • Property (sale/purchase) documents

 

Check salary credit with your CTC – Pull out the salary structure (CTC) statement given by the employer and compare the total salary as per CTC against the consolidated salary statement for the financial year 2014-15 (i.e., 1st April 2014  to 31st March 2015). Normally, you will find a variance between salary and CTC. If you can’t figure out the reasons for variance, you can raise a query to your HR or service provider. Get this issue sorted out at the earliest. (Who knows, you may get more money, if the employer has not computed the salary correctly!)

 

[ReadTen reasons why your Take Home Salary is much lesser than the CTC]

 

Check 26AS with your salary statement – The employer deducts tax (TDS) from your salary and deposits the same in the government account. The amount so deducted and deposited will reflect in your Form 26AS. You can login to your Income Tax account and download the statement. Check the tax credits in the statement with that of TDS as per consolidated salary statement. In case of any discrepancy, raise a query to your employer. Maybe, the last quarter TDS (Jan to March) will reflect in 26AS around Mid-May 2015.

 

Bank Statement of all bank accounts

List out the number of bank accounts you have, login to each of these accounts and download (in excel format) the account statement from 1st April 2014 to 31st March 2015. Check all the entries in bank statement. Any Interest credited by the banker to be offered for tax (while filing the return you can show this income). All high value debits/ credits to be identified and marked in the statement (you can write the reasons / transactions details in the statement)

 

Property transactions

If you have bought or sold any property during the year, the same has to be declared to Income tax department while filing tax returns. In case any taxes to be paid on gains, it is advisable to compute the liability and pay the dues at the earliest.

 

Stock transactions

Are you investing in stocks or mutual funds? Have you sold any stocks/shares or mutual funds during the year? If so, ask your service provider to give you a profit and loss statement. You can also download the statement online if your service provider is ICICI direct or HDFC, etc. Computing the gain and payment of tax on stock transaction is to be done on or before filing the return.

 

Tax benefits not claimed through the employer

I will give you one example. The donations made by you, eligible for tax deduction u/s 80G are not considered by the employer at the time of computing TDS on salaries. So, you have to claim the benefit at the time of filing the return. Similarly, if you have missed claiming deduction u/s 80C (investments), u/s 80D (Mediclaim insurance), u/s 10(13A) (House Rent allowance), etc., while computing TDS by the employer, you can claim such benefits while filing the return.

 

Credit card statement

If one spends over Rs.2 Lakhs through credit card per year, the banker will share the list of such account holders with Income Tax department. This is one of the reasons why Individual tax returns are picked up for scrutiny assessment by Tax department. So, download the statement or get it from the bank, write the remarks on all high value transactions for the financial year 2014-15. You can store this statement in dropbox.

 

Don’t wait till July, file the return early, sooner the better

It is the habit to file return in the month of July. This year, if you mind, you can break this tradition! You can file the return in another 2 months time! Try it out. July is when your tax consultant is busy and you are in a hurry. Hence there is always a chance of missing some transactions. Filing returns? Sooner the better.

 

Statement of Affairs

Those who have multiple bank accounts, multiple sources of income such as salary, rental income, interest income and many properties are advised to prepare a document called ‘Statement of affairs’. This is somewhat similar to the Balance Sheet of companies. All assets and liabilities are captured in this statement.

 

Tax planning for the current year

People will figure out the tax saving options at the year end, say somewhere in Jan 2016 or so. I suggest making tax planning a serious business and doing it systematically from this month onwards for the financial year 2015-16 will surely help you to reduce your tax burden.

 

Thought for the day

Failure to plan is planning to fail.

 

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About CA Prasad Chartered Accountant

CA Prasad Chartered Accountant
CA Prasad is a practicing Chartered Accountant and partner in Bangalore -based CA Firm. For further information or query, please email it to [email protected]