ELEVEN things you should know about filing of your Income Tax return

 

  1. Declare your entire income. In the Income Tax Return form there is a separate section for declaring exempt income also. Income like interest on Public Provident Fund, interest on tax free bonds, dividend on equity shares etc is exempt from tax but this also needs to be declared
  2. Income of minors is taxable in the hands of the parent having higher income. For instance you have made a Fixed Deposit in a bank in the name of your minor son. Income on the FD will be added to the income of mother or father whoever has higher income. A deduction of only Rs 1500 is allowed.
  3. Income earned by spouse on money/assets transferred is taxable in your hands. For instance you have gifted your spouse Rs 5 lakhs and an FD is made. Interest earned by your spouse has to be added to your income. Same thing applies for assets/money transferred to your daughter in law. Provision doesnot apply to money transferred to son in law ( because no body would like to do that ?).
  4. You can transfer money/assets to your parents and income earned on this would not be clubbed with your income. Similarly income earned by your major children from money / assets gifted would be taxed in their hands and not yours.
  5. Interest earned on Post Office MIS, National Savings Certificates, deposits with cooperative banks or societies including employees benefit or thrift societies is taxable.
  6. Before filing your return you must check your Form No 26AS on the income tax site as it will have details of income earned by you as well as tax deducted at source by different parties. You file your return and subsequently it turns out that some amounts appearing in Form No 26AS donot appear in your return, the department will send you a notice or your return could be picked up for scrutiny.
  7. If any income is not offered to tax, the department can go back about 7 years and reopen your case. In some cases it can go back 10 years and for any foreign assets the time limit is 16 years.
  8. If you have changed your employment during the year, income from both the employers has to be clubbed for taxation. You will get basic deduction of Rs 2.50 lakhs only once and therefore, in most of the cases, some more tax will be payable at the time of filing return.
  9. Even if tax is fully deducted out of your salary or interest income, you need to file your return of income if you have crossed the basic exemption limit ( without considering deductions U/s 80 C or other sections).
  10. Last date for filing returns in non tax audit cases is July 31st and it is advisable to file your return before the due date.
  11. Temples, Mosques, churches and charitable entities are not only required to file return of income but they are also required to obtain registration U/s 12A of the Income Tax Act. Unregistered entities would get taxed on their gross earnings ( and not net income after expenses ) at maximum marginal rate without any basic exemption.