Simple ways for a seamless e-filing

This could be one of the most common experiences in an employee’s life i.e. changing jobs. And if this change happens within a financial year then one gets two salary proofs i.e. form-16. While filing income tax returns on two form-16s could come up with some hiccups. Most of these pitfalls, however, could be avoided even before the generation of the form-16. Of course, not all career shits are well-planned and could happen all-of-a-sudden.

The usual mistake or error that happens is the consideration of tax deductions at both the employers. For instance, when an employee declares/ submits the investment details with the employer, they accordingly deduct the tax on a monthly basis for the entire financial year. In case of additional income through bonus/ incentive, etc. an ad-hoc deduction, usually a TDS (tax deduction at source) of 10% is done. Some organizations, however, imbibe this additional income into the calculation sheet to arrive at the tax projections dynamically.

So, when the employee moves to another organization, most of the times, with a hike the income is increased and the employer typically requests for investment declaration/proofs for tax deduction. If the employee submits/declares the earlier details it leads to duplication and a lower net income is considered and hence a dip in the overall tax collection at TDS. At the end of the financial year, when the employee files for the returns, realizes this folly and also a pending tax commitment to the department.

In order to avoid this ordeal and paying a tax along with a penalty, the employee could as well refrain from duplicating the investment details at the second organization. And if the newer organization allows its employees to declare the previous income then it’s ideal to fill in the approximate figures so that tax calculation could be towards accuracy. Then the deviation would be less and the liability could be very minimal.

The common problem is if the employee didn’t submit proofs in the latest organization and the earlier one didn’t consider any of his declaration. Then there could be deviation in the tax calculation. This becomes tedious when the form-16s doesn’t reflect the exemptions but one is eligible for such provisions. The problem intensifies when one files online with the existing PAN data where the tax receipts are already recorded.

For example, House Rent Allowance (HRA) is an exemption which is provisioned and if the form-16s of the individual doesn’t reflect then one could still get the refund/get exemption. To verify, if the allowance was considered or not, one has to check their row 2 which details the deduction of the allowances this is right after the details of row 1, which gives the gross salary. Once confirmed about the absence of this deduction one has to check their eligibility in HRA and this is the least of the three conditions:

HRA Received

% of basic (50 for metros and the rest 40)

Actual rent paid - 10% of basic

Accordingly, one has to find out the actual exemption and deduct it from the gross salary and reduce the other allowances like conveyance and employment tax to arrive at the gross taxable income. So, when filing online, one could directly deduct the eligible HRA amount from the gross taxable income and enter in the row income from salary/pension. This would help you arrive at an accurate amount of tax to be paid/claim a refund.

Once, one successfully submits their returns, an EVC or Electronic Verification Code is generated. This is a 10-digit alphanumeric code, unique to each PAN and to return. So, if one were to revise the return then a new EVC is generated. Now, sending the physical copy of the ITR-V is not required. This year, the Income Tax department has extended the due-date for filing tax returns to 31st Aug ’15 from the usual date of 31st July ’15.

K Naresh Kumar

The author is a practicing financial planner and could be reached at [email protected]