Importance of filing correct Tax Returns

Importance of filing correct Tax Returns:

It is imperative that you are honest about the details of all your income and expenses for a fiscal for tax calculation purposes. Sometimes, you may miss a few details such as income from previous job when switching to a new job, or additional income from a contractual opportunity. This should not happen as hiding or misrepresenting income sources will be heavily penalised by the respective tax authorities. You have to ensure that all your data is in order and will hold up to any cross verification at a later stage to avoid problems with the taxman.

Frequently Asked Questions

1. What is the TDS rate for FY 2017-18?
For individuals under 60 years of age, the tax rate for income up to Rs.2.5 lakh is nil. The tax for income between Rs.2.5 lakh and Rs.5 lakh is 5%. The rate for income between Rs.5 lakh and Rs.10 lakh is 20%. The rate for income in excess of Rs.10 lakh is 30%.
For individuals between 60 and 80 years of age, the rate for income up to Rs.3 lakh is nil. The rate for income between Rs.3 lakh and Rs.5 lakh is 5%. The tax rate for income between Rs.5 lakh and Rs.10 lakh is 20%, and the rate for income in excess of Rs.10 lakh is 30%.
For individuals above 80 years of age, income up to Rs.5 lakh is exempt from tax, while income between Rs.5 lakh and Rs.10 lakh is 20%, and income above Rs.10 lakh is charged at 30%.
Surcharge will be applicable for individuals who earn income in excess of Rs.50 lakh, and a 3% cess is also applicable on tax plus surcharge.
2. Can HRA be claimed as a deduction when calculating TDS?
Employees will have to declare the amount paid as rent and it can be claimed as an exemption.
3. How much deduction can I claim under Section 80C when calculating TDS?
The maximum amount that can be claimed under Section 80C of the Income Tax Act is Rs.1.5 lakh.
4. What items are allowed for TDS exemption?
The following items are eligible for exemption:
• PPF (Public Provident Fund)
• ELSS (Equity Linked Savings Scheme)
• Contribution to EPF (Employees Provident Fund)
• Bank FDs
• NSC (National Savings Certificate)
• Premiums paid towards life insurance policies
• Repayment of home loan principal amount
• Transport allowance
• House Rent Allowance
• Savings under Section 80C of the Income Tax Act, 1961
5. What are the items on which deductions can be claimed under Section 80C?
Here is a list of items on which deductions can be claimed under Section 80C:
• Investment in Public Provident Fund
• National Savings Certificate
• Employee’s share of Provident Fund contribution
• Premium payment towards life insurance policies
• Tuition fees of children
• Home loan principal repayment amount
• Unit linked insurance plans
• Equity linked savings schemes
• Investment in Sukanya Samriddhi Account
• Amount paid to buy deferred annuity
• Senior Citizens savings scheme
• 5-year deposit scheme
• Subscription to notified deposits scheme / notified securities
• Subscription to National Housing Bank’s Home Loan Account Scheme
• Contribution to LIC’s notified annuity plan
• Subscription to deposit scheme of companies involved in offering housing finance or public sector companies
• Contribution to notified Pension Fund set up by UTI or Mutual Fund
• Subscription to NABARD’s notified bonds
• Subscription to debentures / equity shares of approved eligible issues