Things you must remember while filing tax returns

Written by VineetAgarwal | Vineet Agarwal | Updated: Jun 12 2012, 14:53pm hrs
As we approach the due date (July 31) for filing tax returns for FY12, its time to update on the recent changes, the procedure to be followed and the common mistakes to be avoided in filing them.

Recent changes

Under the Income Tax Act, 1961, it is mandatory for individuals with taxable income above R10 lakh to electronically file tax returns.

Ordinarily resident individuals and Hindu Undivided Family (HUFs) will have to report details of foreign assets held by them during the financial year.

Procedure for filing returns

The first step in filing tax returns is to compile relevant documents, which include Form 16 obtained from the employer, Form 16A obtained from the concerned vendors who have deducted tax, bank statements, details of other sources of income and details of tax paid.

Form 26AS (consolidated tax statement) should also be collated to find out the amount of taxes that have been deposited in your name in government records. Once the documents are compiled, the total taxable income and tax liability should be computed. After adjusting the advance tax paid, if any, the balance tax liability needs to be deposited as self-assessment tax with interest, if any. Thereafter, the tax return can be prepared and filed with the tax authorities in hard copy or electronically, as applicable.

Common mistakes

It may be worthwhile to keep some points in mind to avoid making small mistakes:Use the correct form. Choose the correct form, keeping in mind the source of income. At times, extra information is required to be furnished if an incorrect form is selected. PAN should be correct. It is important that the PAN quoted in the tax return is correct; otherwise, the tax office could levy a penalty of R10,000.

Slab benefits should be availed only once. Many times, income of the previous employer is not furnished to the existing employer, which results in dual slab benefit in the same financial year. As slab benefit is available only once on the total income, tax may be required to be deposited later along with interest, if any.

Not filing tax returns. It is a common mistake among salaried taxpayers that since tax has been deducted from their salary, there is no need to file their tax returns. However, even though tax has been deducted and there is no further tax liability, an employee has to compulsorily file tax returns. Tax returns need not be filed if the taxable income is up to R5 lakh and the income includes salary and interest up to R10,000 from a savings bank account.

The author is a director in KPMG. Views expressed are personal.