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5 Common mistakes in Income tax

5 Common mistakes in Income tax

No need to file a Return if TDS has been deducted’ – Employers who pay you salary and banks who pay you interest are bound by law to deduct TDS before making a payment. Irrespective of whether TDS has been deducted on you income or not – Return filing depends on your total income. Where your total income from all sources exceeds Rs 2,50,000 you must file a return. Of course, you are allowed to take credit of whatever TDS has already been deducted. You may not have any tax dues at the time of return filing – but apply the same principal – file a return if your total income is more than 2,50,000.

‘If TDS is deducted on Interest income, don’t have to report it in the return’ – Almost each one of us earns interest from a savings bank account or from a fixed deposit, but very few people are aware that this has to be included in the return. While FD income is subject to TDS, no TDS is deducted on savings account interest. However, both these incomes are taxable and have to be mentioned in the return under income from other sources. Deduction of Rs 10,000 is available under section 80TTA for savings bank account interest and you can read more about ithere.

‘Donations are 100% exempt’ – If you are committed to a cause and make a donation, you don’t want to miss out on its tax benefits. But not all donations carry a 100% exemption, some are exempt up to 50% and there are some other considerations that have to be met – read here.

‘Interest on NSCs is tax free’ – Interest earned on NSCs is fully taxable! Although it can be claimed as a deduction under section 80C in all the years (except last year). So if you have bought NSCs do remember to show it as part of your income from other sources and claim a deduction under section 80C.

‘Taking TDS credit for amounts missing from Form 26AS’ – TDS deducted from your income is adjusted against your final tax liability. Even though TDS may have been deducted from your income but if it doesn’t reflect in your Form 26AS, the tax department may not allow you to take credit of it. Make sure all TDS deductions are correctly reflected in your Form 26AS, that’s the document IT Deptt trusts.

 5 Common mistakes in Income tax

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