|
The first thing which comes to mind when we think of Income Tax Act is the complexity of the law. The income tax department has put in a lot of effort to simplify tax laws for ordinary citizens, but still there are lot of things about income tax law which you may not be aware of or which may have been incorrectly understood. In this article we will like to highlight some of the common income tax provisions which could be useful for filing correct income tax returns and which you may not be aware of.
>> No need to file income tax return when TDS has been deducted by 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 gross total income (i.e total taxable income before allowing deductions under Chapter VI-A) exceeds Rs. 2,50,000 for FY 2014-2015.
>> No additional income tax payable, if tax deducted (TDS) on income:-
In most of the cases, it is noticed that other incomes such as interest on fixed deposits, rental income is earned by tax payer on which either no tax is deducted or tax is deducted at a rate lower than actual tax on such income or the tax payer fails to disclose the same in his income tax return. In all such cases, the tax payer should disclose such income in his return and he/she may have to pay some additional income tax on the same.
>> Exemption for HRA is always available :-
Taxpayer is 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.
>> Claim deduction for interest income of Rs. 10,000 on deposits in saving account & fixed deposits :-Interest earned on deposits in saving bank account is exempt upto 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 reinvested, except for the last year since the interest is received by taxpayer at the time of maturity
>> 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% deduction is not true.
Most of the donations to private trusts are eligible for 50% deduction of 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 was 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, from anyone are totally free from income tax.
Happy reading...
|
