Last date of Income Tax Return filing is approaching. All taxpayers have a lot of doubts and queries related to income tax. Though each query is different and unique but there are some common points which are useful for all taxpayers. Over last 10 years, the return filing process has simplified. Once it was unthinkable to file the return on your own. I used to pay Rs 4,000 for return filing in Mumbai. TRP was 1st major reform and max fees of a TRP was capped. Online tax filing turned the table upside down and completely simplified the entire process. In case, you have income only from salary, you don’t require any professional help to file the return.
I still believe that there is a long way to go. The entire taxation process should be simplified. One of the solutions is to do away with deductions and allowances. Tax at lower rate 5% should be charged on Gross income. Another solution is to tax cash transactions which will bring more people in the tax net. The biggest problem in India is the mindset of people to evade tax. If everyone will start paying the tax honestly then Income Tax rates will automatically reduce to lower levels. It will bring more people under tax net as lower rates will not pinch the pocket of taxpayers. Anyways its a topic of long discussion. Through this post, i am sharing 51 important points related to income tax.
1. The official website of Income Tax department is www.incometaxindia.gov.in
2. As per Income Tax Act, Income is taxable under five heads- Salary, House Property, Business or Profession, Capital Gain and income from other Sources. It sounds so simple but in reality it is very complex to calculate.
3. For a Salaried Employee, Form 16 from his Employer is a must.
4. A Salaried Employee can file Income Tax Return by using Form 16 and adding other Income. Here i am assuming that there is no other source of income
5. From FY 2015-16, Transport Allowance is exempted up to Rs.1,600 per month.
6. A Standard deduction of 30% is available on Income from House Property.
7. Second House Property is always considered as deemed let out. You have to consider the Income from House Property even if it is vacant. In case of Home Loan, you can claim Loss from the Let Out Property.
8. For self-occupied house property, maximum deduction of Interest on Home Loan is Rs. 2 Lac. For let out property, actual Home Loan Interest is allowed as a deduction.
9. Repayment of Home Loan Principal amount u/s 80C is up to Rs. 1.5 Lac. You may check my post, Home Loan Tax Benefit Deductions for more details.
10. In case of a Business, Tax Audit is compulsory if sales turnover exceeds Rs.1 Cr.
11. In case of self employed professionals, Tax Audit is compulsory if the Gross Receipts exceeds Rs.25 lac.
12. Maximum Cash payment to any individual in a single day should not exceed Rs.20,000.
13. For Loans, deposits and Properties transactions, maximum cash limit is Rs.20,000 for the transaction. In property transaction, this limit is for paying token money.
14. Any loss from Business can be carried forward for next 8 financial years.
15. TDS is due at the time of making Payment.
16. TDS payment should be made on or before the 7th day of next month in which it is deducted.
17. Late filing of TDS return attracts late filing fees of Rs.200 per day u/s 234(E).
18. Long Term Capital Gain will arise if the holding period of an Asset is more than 3 years. In case of Equity, if the holding period is more than 1 year then there is no tax on the capital gains.
19. In most of the cases, Long Term Capital Gains is taxable @ 20%
20. STT paid Long Term Capital Gain on equity etc is exempted from the Income Tax.
21. If the STT is paid then Short Term Capital Gain is taxed @ 15%.
22. Capital Gain on Immovable Properties is chargeable at Guidance Value/Ready Reckoner Value or Transaction value, whichever is higher.
23. Dividend distributed by the domestic companies is exempted from Tax.
24. Agricultural Income is 100% exempted from Tax.
25. Gifts received from the non-blood relatives which exceed Rs.50,000 is taxable in the hands of recipient.
26. Gifts received at the time of Marriage, inherited through Will or Succession and from blood relatives are tax free.
27. Maximum deduction allowed u/s 80C, 80CCC and 80 CCD is Rs.1,50,000.
28. Tax deduction on Health Insurance Premium is available up to Rs. 25,000.
29. Tax deduction on Health Insurance Premium is available up to Rs. 20,000 for parents.
30. Deduction limit of Interest earned on Savings Account is up to Rs.10, 000.
31. Income earned by a Minor child is clubbed with the income of Parents.
32. It is critical that every Taxpayer should verify his Form 26AS.
33. Form 26AS provides the Information regarding the TDS deducted, Advance Tax paid and Refund details.
34. If there is discrepancy between Income mentioned in the Form 26AS and the Income Tax Return filed then the taxpayer may receive notice from the IT department.
35. For FY 2015-16, Basic Exemption Limit for individuals is Rs.2.5 Lac.
36. For FY 2015-16, Basic Exemption Limit for Senior Citizen i.e. above 60 years age is Rs. 3 Lac.
37. For FY 2015-16, Basic Exemption Limit for Super Senior Citizen i.e. above 80 years age is Rs. 5 lac.
38. Advance Tax should be paid if the Tax Liability during the financial year exceeds Rs. 10,000.
39. A Surcharge of 12% is applicable if the Income Exceeds Rs. 1 Crore.
40. It is mandatory to file Income Tax Return if the Income exceeds Basic Exemption Limit.
41. It is mandatory to provide details of all the Bank Accounts in Income Tax return.
42. It is mandatory to provide Passport number in the Income Tax return.
43. It is mandatory to provide detail of Fixed Assets held abroad in the Income Tax return.
44. If the taxable income of Individual is less than Rs. 5 Lacs then rebate of Rs.2,000/- is available on Tax.
45. Aadhar No. should be mentioned in the Income Tax return.
46. If the income exceeds Rs. 5 lacs then e-filing is mandatory.
47. You can e-file income tax return only for Previous 2 Years.
48. PAN Card is essential for Taxpayers and it should not be mentioned in return.
49. If you have Aadhaar then you need not send ITR V acknowledgment through Ordinary Post or Speed Post to IT department. You can opt for Aadhaar based authentication to file Income Tax Return.
50. TDS u/s 194IA is deducted from Seller’s contribution. A buyer cannot claim a refund of TDS deducted.
51. Tax Benefit of Rs 5,000/- is available u/s 80D for preventive health check up.