Income Tax
Warning: This is a lengthy post.
Filed some salaried ITRs during this tax period. Following are some of the common mistakes which can be avoided
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If you have changed jobs ensure that income from previous job is disclosed to the current employer and TDS gets deducted correctly. One basic check you can do is the TDS deductions made by new employer should not be lesser than monthly deductions done by your previous employer unless you have lower CTC compared to your previous job or have additional deductions.
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During Feb/March take your bank statement, trading account statement and declare the income from capital gains, dividends and interest to your employer, so TDS can be deducted accordingly. Helps in avoiding surprise cash outflow in July and saves from paying interest @ 1% per month on this tax
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If you have ESOPs/RSU from Foreign Companies this should be disclosed in Foreign Assets and liabilities schedule. Some employers would have opened bank accounts in that country to settle your ESOP transactions. This is also required to be disclosed under foreign bank accounts. If the ESOPs and RSUs are from unlisted Companies then it also has to be disclosed under unlisted shares held. Additionally if you are Indian resident as per the Income tax law (most of you will be) your global income becomes taxable and any dividend received on these ESOPs or capital gain on sale of ESOPs of foreign Companies has to be offered to tax. However, if there are taxes deducted on these transactions the same can be claimed by filing Form 67.
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For current year if you are in salary bracket above 20 lakhs then new regime will be beneficial mostly unless you have housing loan interest from Self occupied property. Under new regime Employer contribution to NPS up to 10% of basic salary can be claimed as exemption.
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Get a good consultant today itself and plan the your finances accordingly. In case of salaried individuals there are very less avenues to save tax after March
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Don't claim any fake exemptions. Also try to cover all exemptions in Form 16 itself by giving proper proofs to employer. Now departmnet is sending notices in cases where there are significant differences with Form 16, asking to give proof for claiming exemptions.
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In case you are a consultant and claiming 50% deduction u/s 44ADA ensure to get registered under GST and charge GST when your turnover is exceeds 20 lakhs. In case of export of services you need to file LUT with department to not charge GST. If you are claiming 50% ensure to at least spend that amount out of the total income received. Got a case where department is asking to prove that 50% of the income is spent for business.
If we are not able to prove that 50% then what happens?
No idea yet. These type of notices are very recent. At max they can add back unspent amount to income and tax it along with interest and penalty.
Thanks for the info
If so you have to pay advance tax for such income
Thanks for the info. But as for point 2, I don’t think there is any way to disclose those FD/Stocks income to the employer. They don’t ask for it, there is no place to declare and if we intimate them by email, I wonder if they will work to take that in account just for a few people.