We take the opportunity to bust a few myths:
No need to file Income-Tax return when TDS has been deducted by the employer
It’s a misconception that, if the employer has deducted TDS, you need not worry about filing your income-tax return. Just because taxes have been paid on your behalf doesn’t mean that filing a tax return is not required. Filing of Income Tax return is mandatory, if taxable income exceeds Rs 250,000 for FY 2014-2015.
No additional Income-Tax ix payable, if taxes are already deducted (TDS) on income
In most cases, taxpayers either fail to pay tax on interest on fixed deposits, rental income etc or they choose to ignore mentioning them while filing returns. When you have such incomes, ensure that you follow the correct steps ot filing the returns.
Exemption for HRA is always available
Taxpayers are not allowed to claim any exemption of house rent allowance if he/she lives in his/her own house or if he/she is not paying rent to anyone or if he/she have house in the same city.
Claim deduction for interest income of Rs 10,000 on deposits in saving A/C and fixed deposits
Interest earned on deposits in saving bank account is exempt up to Rs 10,000 but interest earned on fixed deposits is taxable under Income-tax Act.
Interest on National Savings Certificate (NSC) is exempt income
Interest on NSC is chargeable to tax on the basis of annual accrual specified in NSC rules. You have to consider it as part of your total income. However, it is eligible for deduction u/s 80C if it is re-invested.
If employer does not pay HRA or if you are a self-employed person, deduction for rent paid is not allowed
For an individual other than one receiving HRA (whether self employed or otherwise), deduction is available under Section 80GG of the Income-tax Act, 1961 for payment of rent on accommodation. But deduction of rent paid is subject to certain conditions and the maximum deduction cannot exceed Rs 24,000.
All donations are eligible for 100% deduction
The belief that all donations are eligible for 100 per cent deduction is not true.
Most of the donations to private trusts are eligible for 50 per cent deduction of the amount donated.
Received cash or property as a gift from a friend, I do not have to pay any tax
You are right as long as the amount is less than Rs 50,000 during the financial year. If it exceeds Rs 50,000, the whole of such value will be chargeable to tax. However, the good news is that the money/property received on the occasion of marriage, are totally free from income tax.
We are sure that the above points will help you file correct income-tax return.
Illustration: Uttam Ghosh/Rediff.com
Saakar Yadav is the managing director of myitreturn.com