Friday 8 April 2011

THINGS TO KEEP IN MIND WHILE FILING INCOME TAX RETURNS

Filing tax returns is an annual mandate that tax payers have to comply with, the last date for which is in sight i.e. July 31st, 2011. In a haste to meet the deadline, make sure you do not miss key elements that can cause trouble later.


Critical information should be cross verified


No income tax return will be accepted without the PAN and incorrect PAN can result in a fine being levied. Communication address should be correctly stated as all notices or other communication from the IT department will be sent to the provided address. Also make sure that the MICR code is correct if you want an electronic refund and also ensure that bank account details are correctly stated for hassle free refunds.


Safe keep all relevant documents for future use


The IT department has done away with enclosing documents while filing returns i.e. proof of tax, statement showing computation of taxable income etc. Not having to produce it at the time of filing returns doesn’t meet that you can put away the documents carelessly. In case of scrutiny, the tax authorities may need supporting documents for verifying the claims made in the return.


Disclose exempt income and investments made


Income such as dividends from mutual funds and long-term capital gains on listed securities, are exempt from tax. Even though the tax laws do not require you to pay tax on the same, the law requires you to report these in your tax return.


Investments above a prescribed limit have also to be disclosed as per IT laws. They include




Mutual fund investment in excess of Rs. 2 lakh
Cash deposits in excess of Rs. 10 lakh
Credit card payment in excess of Rs. 2 lakh
Bond investment in excess of Rs. 5 lakh
Property bought or sold in excess of Rs. 30 lakh
Report income from a previous employer




Employers deduct TDS from the employee’s salary. While computing the TDS, employers generally provide the basic exemption deduction to the employee. If at the time of changing the job, the employee has not informed the new employer, it could lead to a situation where the TDS cut by the new employee would be low, as he may be taking in to consideration the full deduction amount while calculating tax. Thus you may have tax liability at the time of filing returns. Not disclosing income from the previous employer may result in an income tax notice as it will be spotted when the TDS data is being reconciled.


Revision of Income


If the IT return has been filed before the due date i.e. 31st July, tax payers are entitled to submit a revised return in case of any error or omission therein. However, revision is not permitted if the return is filed beyond the due date.


Precautions taken at the time of filing returns will prevent hassles later. To make sure you file your returns before the 31st, start the process now- Procrastination is the thief of time!


Read more: Things to keep in mind when you file tax returns | SIMPLE TAX INDIA-TDS RATE INCOME TAX RATE

Friday 1 April 2011

Issue refunds fast says Finance Ministry to Income Tax department

Concerned over high interest outgo on tax refund claims, the finance ministry has asked the income tax department to speed up the processing of such claims for the current financial year.
The slow processing of tax refund claims has always been a bugbear for the government and taxpayers alike. The backlog has risen steadily over the years. In 2005-06 there were 5.7 lakh refund claims, which has shot up to 19.4 lakh in 2009-10.


The finance ministry has asked income tax department to take the help of the Institute of Chartered Accountants of India (ICAI) -the regulatory and governing body of CAs -to clear up long-pending claims.


“The income tax department has raised concerns over the delay in processing the refund cases and the authorities have been asked to expedite the exercise,“ a government official, who refused to be identified said.


The government wants to finish the process by March 31. The Comptroller and Auditor General of India had said in its report that the government has refunded R57,101 crore in 200910, which includes an interest amount of about R12,951 crore -nearly 30%. In 2008-09, the amount of actual refunds saw a decline while interest payments increased, reflecting the delay in clearing claims. The CAG report also revealed that the pendency rate for tax refund claims has gone up to 40.4% in 2009-10 from 22.5% in 2005-06.


“We will work closely with the government in clearing income tax refunds and the exercise would get priority,“ said G Ramaswamy, president, ICAI.


In India, the average time taken for processing income tax refund claims is about 10 months. Any taxpayer, who has paid income tax in excess of the amount due in a given year, is eligible for a refund.

Monthly Provident Fund statement w.e.f 2012-13

the Employees Provident Fund Organisation , or EPFO, has decided to give monthly updates of contributions instead of an annual statement.


The EPFO expects this will bring instances of defaults by employers to the notice of workers, who, in turn, will put pressure to demand their dues.


The EPFO, which manages retirement savings of more that 5 crore workers, has been computerising its offices across the country and will be in a position to provide monthly information from the next fiscal.


At present, subscribers only get a small slip at the end of the fiscal with just the opening and closing balance and have no idea about how the amount has grown through the year.


"Often subscribers do not calculate what the total amount should be and do not notice even if contributions have not been made in particular months," Central Provident Fund Commissioner Samirendra Chatterjee told ET. Once monthly data is available, omissions can be easily identified, he added.


The default amount identified by the EPFO through periodic inspection of random establishments in 2009-10 was about 166.12 crore. The EPFO expects more complaints about defaulting employers once the monthly statements are made available to employees.


Defaults have been highest for establishments in Tamil Nadu followed by Andhra Pradesh, Bihar, Karnataka and Kerala.


"Every subscriber is expected to have a detailed statement from 2012-13," Chatterjee said.


Both employers and employees are mandated to contribute 12% of basic pay to the fund every month. The entire contribution to the fund is usually made by employers who deduct the employees share from their pay and add it their own contribution.


About 20,000 crore to 30,000 crore is added to the corpus every year.