ITR:File It, Don’t Fear It!

Chanchal Srivastava, working as a marketing executive with an MNC, was recently jolted out of his chair when he was delivered a paper that came from the Personnel Department of his company. No, it was not a ‘pink slip’ but at the same time it was not any less painful. This paper is what we know by the name ‘Form 16’ that all employers issue to their employees for the tax deducted during the year. However, the real reason for the shock experienced by Srivastava was something different. As per his investments and expenses made during 2009-10, a greater amount of TDS had been deducted by his employer than what he had to pay in accordance with the Income Tax Act. When he Cdiscussed the matter with the officials concerned, he was told that nothing could be done at their end. The only option, they pointed out, was to claim a refund from the IT Department. Baffled, Srivastava hurriedly con-tacted his chartered accountant who immediately put his anxiety at rest by stating that the refund would be processed by the IT Department on its own once the income tax return (ITR) had been filed. But obviously, Srivastava took a deep breath of relief. Quite similar to this case, brick kiln owner Ajay Sehta has been quite perturbed about collecting his TDS certificates for the tax deducted on the payment made to him. “I have to collect Form 16A for each and every sale so that I can show it in my final return. This indeed is a very cumbersome process,” he says.

These are not one-off cases and every year many people face this problem, especially in the month of April or May and find themselves in a unique kind of fix as to what should be done about it. On the other hand, we believe that this is not at all a problem and if everybody makes it a habit to file an ITR every year and prepare or preserve his/her documents properly all through the year, there won’t be any compli-cations at all. Also, it might actually yield other valuable advantages to the assessee. The Income Tax Department, working under the Ministry of Finance, is always treated in India as being nothing short of a demon. This misconception gives rise to other ‘myths’ about income tax and the common man usually starts shiver-ing on just hearing the name of it. However, this department is one of the most transparent and well-organised institu-tions of the country and rather than fearing it we must take advantage of its professional and fruitful conduct. The ITR, for instance, is a document which can make our life hassle-free on many counts and the filing of it is as easy as doing a net banking transaction or depositing a cheque in the bank. But we should make it a point to file it well before the last date so that we can escape the last minute rush. 

Another mistake usually committed by most people is that they don’t include the interest earned on the sav-ings bank account into their income. This is incorrect. Also, another fault in tax calculation is related to life insurance. Tax benefit on life insurance is only available in the year in which the premium is paid and not on the pay-able premium. So if any person forgets to pay premium in one year and pays it during the next year, he/she would get the benefit of the premium in the year in which it is paid. As regards deduction u/s 80C for children’s school or col-lege fee, only the tuition fee is allowable as a deduction. Another technical error that usually happens during tax computation is about the treatment of interest accrued on the previous year’s NSC. “We have to be very careful that interest on the previous year’s NSCs is added to other source income and then only does it qualify for deduction u/s 80C,” Raj points out.