Income Tax News: Urgent! Tax Mistakes Salaried Professionals Must Avoid; Tips for Seamless Filing

Income Tax News: Filing income tax as a salaried employee can seem less complicated than for other business owners or freelance workers. However, even salaried individuals can stumble into penalty zones due to negligence or misinformation. Let's delve into some common pitfalls and their associated penalties, specifically for salaried employees in India.

Penalties for Salaried Taxpayers

1. Late Filing: Effective from the financial year 2017-18, a late filing fee is applicable under Section 234F for filing income tax returns after the due date. For example, if the due date for filing returns for FY 2023-24 is July 31, 2024, and you file the belated return by December 31, 2024, a maximum penalty of Rs 5,000 is imposed. However, for small taxpayers with total income not exceeding Rs 5 lakh, the maximum penalty for delay is reduced to Rs 1,000.
2. Incomplete or Inaccurate Information: Mistakes or omissions in your ITR, including missing income sources, incorrect deduction amounts, or bank details, can cost you dearly. A penalty of 50% of the tax evaded due to such discrepancies might be levied. Be meticulous when filling your return and double-check everything.
3. Underreporting Income: Intentionally omitting income is a serious offense in India. If caught, you face a penalty of 50% of the tax on the unreported income, and in severe cases, prosecution under Section 276 C with potential imprisonment. Honesty is the safest policy, even with taxes.
4. Non-payment of Advance Tax: If you get your salary with taxes deducted, you don't have to pay advance tax. But if you earn money from things like interest, selling investments, or renting property, you need to pay advance tax. If your estimated tax liability for the year exceeds ₹10,000 and you fail to pay your advance tax installments, you'll be charged interest at 1% per month on the unpaid amount. Remember, advance tax isn't optional; it helps avoid a hefty lump sum payment during filing.

Avoid These Wrong Practices

• Ignoring Tax Notices: A notice from the requesting clarification or additional information is not to be ignored. Neglecting such notices can lead to penalties and even prosecution under Section 276B. Respond promptly and address the queries raised.
• Not Revising Returns: Discovered an error or omission after filing your ITR? Don't panic! You can revise your return within a specified timeframe under Section 139(5) to rectify the mistake and avoid potential penalties.
• Tampering with Form 16: Your Form 16, issued by your employer, is crucial for accurate tax filing. Modifying or falsifying this document is a serious offense punishable by heavy fines and imprisonment under Section 471 and 276C.
• Not Maintaining Proper Records: Keep track of your income, expenses, investments, and tax-saving contributions throughout the year. Organized records simplify filing, provide evidence for deductions, and help in case of inquiries.

Tips for a Smooth Tax Journey

• Understand the Tax Rules: Familiarise yourself with basic Indian income tax rules and deductions applicable to salaried individuals. This empowers you to make informed decisions and avoid errors.
• Seek Professional Help: Consult a Chartered Accountant or Tax Consultant if you're unsure about any aspect of tax filing. Their expertise can save you time, money, and potential penalties.
• Maintain Proper Records: Keep organized records of your income, expenses, investments, and tax-saving contributions. This simplifies filing and provides evidence for deductions.
• File Early: Don't wait until the last minute. Filing your ITR early gives you ample time to review and rectify any errors, avoiding the stress of a last-minute scramble.

Disclaimer: This information is intended for general knowledge only. Any financial decisions should be made in consultation with a qualified professional. DNP News Network Private Limited is not liable for any financial losses incurred based on the information provided here.

Keep watching our YouTube Channel ‘DNP INDIA’. Also, please subscribe and follow us on FACEBOOK, INSTAGRAM, and TWITTER