Financial Chronicle - - EDIT, OPED, THE WORKS - with Rad­hika Arora

AS THE In­come tax re­turn sea­son is ap­proach­ing fast, it is the time when the tax payer should be­come dili­gent and get the nec­es­sary doc­u­ments ready for fil­ing the in­come tax re­turn. The dead­line to file the in­come tax re­turn for the fi­nan­cial year 2017-18 is 31 July. The cut-off date be­comes more crit­i­cal this year on­wards as fil­ing of the in­come-tax re­turn be­yond this date would at­tract manda­tory levy of penalty, which can go upto Rs 10,000. Timely fil­ing of the in­come tax re­turn fur­ther fa­cil­i­tates the scope for re­vis­ing the re­turn in case any er­ror gets en­coun­tered later. Many times salaried tax­payer ends up pay­ing more taxes by way of ex­cess de­duc­tion of TDS. Fil­ing the in­come-tax re­turn be­yond the due date would re­sult in loss of in­ter­est of in­come tax re­fund in such cases.

In­tro­duc­tion of ad­di­tional penalty for de­lay in fil­ing the re­turn is a re­sult of the gov­ern­ment be­com­ing more strin­gent to­wards in­come-tax com­pli­ance to reg­u­larise the sys­tem of di­rect tax­a­tion in In­dia. Its vig­i­lance to­wards the tax evader has in­creased the dis­clo­sure re­quire­ment for the salaried tax­payer this year by widen­ing the scope of In­come Tax Re­turn (ITR) forms.

In­dia earns ma­jor por­tion of its taxes from its salaried class pop­u­la­tion. In Bud­get 2017, fi­nance min­is­ter re­ported that out of the 76 lakh in­di­vid­ual as­sessees who de­clared in­come above Rs. 5 lakh for the year 201516, 56 lakh were salaried class. In spite of sin­cer­ity of the salaried class to­wards its in­come-tax com­pli­ances, the gov­ern­ment is act­ing proac­tively to iden­tify the salaried tax evaders who strive to save taxes on their salary in­come by il­le­gal means.

Un­even­ness in the tax­a­tion sys­tem which bur­dened the salaried class lured such tax pay­ers to adopt the var­i­ous un­law­ful mea­sures to avoid pay­ment of taxes. Many tax­pay­ers re­sorted to fur­nish­ing false claim like HRA, med­i­cal ex­penses, 80C de­duc­tions, not reporting in­ter­est in­come and in­come from dif­fer­ent em­ploy­ers etc. These mal­prac­tices made the gov­ern­ment more vig­i­lant and re­sul­tantly in­creased the dis­clo­sure re­quire­ment to en­sure the ad­her­ence of law while fil­ing the in­come tax re­turn.

The gov­ern­ment go­ing digital de­sires to ca­pit­u­late the max­i­mum data through its elec­tronic ITR forms to keep a close eye on the salaried tax evaders. Tax pay­ers would now be re­quired to pro­vide the breakup of salary such as tax­able al­lowances, value of perquisites, de­duc­tion for pro­fes­sional tax etc., and de­tails of in­come from house prop­erty such as gross rent re­ceived, tax paid on prop­erty, in­ter­est payable etc. With this wide range data in hand, the in­cometax depart­ment will have more clar­ity re­gard­ing the com­pu­ta­tion of tax li­a­bil­ity.

In con­trast to last year’s ITR form, the tax payer would be re­quired to fur­nish the PAN of the ten­ant while claim­ing the HRA ex­emp­tion. This re­quire­ment was op­tional till last year. De­spite the fact that salaried tax­pay­ers are one of the ma­jor con­trib­u­tor in the gov­ern­ment’s kitty, the gov­ern­ment is mak­ing an at­tempt to not spare the ex­cep­tional tax pay­ers in the said class.

The rev­enue depart­ment has al­ready warned the salaried tax payer against fur­nish­ing the wrong or false claim in or­der to seek tax re­fund. It clearly men­tioned that the de­fault­ing tax payer would be li­able to penalty and pros­e­cu­tion. Ad­vi­sory was is­sued to in­form the tax payer not to fall prey to false prom­ises or il­lad­vice by un­scrupu­lous in­ter­me­di­aries and sub­mit wrong claims in their ITRs, which would be treated as cases of tax eva­sion. The gov­ern­ment has be­come cau­tious to­wards the salaried class tax evaders. To avoid the has­sles, it be­comes all the more im­por­tant to timely file the in­come tax re­turn to pre­vent any last minute rush.

Prepa­ra­tion would re­quire dis­charge of tax li­a­bil­ity, if any, and com­pi­la­tion of dif­fer­ent doc­u­ments to fur­nish the in­for­ma­tion in the in­come tax re­turn. Ba­sis the in­for­ma­tion con­tained in var­i­ous doc­u­ments like Form 26AS, Form 16, hous­ing loan cer­tifi­cates, in­vest­ment proofs and bank state­ments, one must pro­ceed to cal­cu­late the tax and pay the li­a­bil­ity. The gov­ern­ment through Bud­get 2018 has pro­vided re­lief to the salaried tax payer in the form of a stan­dard de­duc­tion of Rs. 40,000 in lieu of trans­port and med­i­cal al­lowances. In­come tax com­pli­ances hold ut­most im­por­tant for the gov­ern­ment and no de­fault­ing tax payer would be ex­cused.

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