Things a taxpayer must keep in mind

Balwant Jain

As the financial year is about to end, filing of income tax return, payment of advance tax and minimum contribution to PPF and NPS accounts are certain key things which a taxpayer must keep in mind

The financial year is about to end and a taxpayer needs to do a lot of things before the year closes. Let us discuss these points one by one. These are the bare minimum things you should ensure before the year ends so as to avoid any unpleasant surprise later.

Filing of income tax return 

It so happens that in case you miss the initial deadline, the matter does not get sorted out until the next deadline approaches. So in case any of you have not been able to file your income tax return either for the financial year 2012-2013 or 2013-2014, you can file the same by March 31, 2015. In case you have not filed the return of income for financial year ended March 31, 2014, by July 31, 2014, you can still file the same by March 31, 2015, without attracting any penalty for filing the return beyond the due date. Since the return has not been filed by due date, you cannot revise the return later on. So please be careful while filing the return and ensure that all particulars are correctly stated and all incomes are correctly included in the return.

As far as your return for the financial year ended March 31, 2013, is concerned, March 31, 2015, is the last and final date for filing of your income tax return and it cannot be filed beyond this date.

Please note that since the return for the year ended March 31, 2013, was not filed by the end of the Assessment Year i.e. March 31, 2014, the income tax office can levy a penalty of Rs 5,000 for such default in case your total income exceeded Rs 2 lakh i.e. the basic exemption limit in that year. Please note the assessing officer can levy this penalty only after your have been provided with an opportunity to explain your case before him.

Please note that in case the tax payable in respect of any of the returns which you are planning to file now, was not paid either as advance tax or TDS, you may have to pay the interest for non-payment of advance tax as well as for delay in filing of income tax return @1% for each of the default. So effectively, if adequate tax was not paid earlier you land up paying exorbitant interest @2% for each month of the delay.

Payment of advance tax

Though nowadays almost all incomes are subjected to TDS provisions, the actual tax slab rate applicable to you may be higher than the rate at which the tax is deducted. Majority of persons have some money invested in fixed deposits either with banks or companies where tax deducted is @10% but you may be falling in the tax slab of either 10%, 20% or 30% so you need to pay the difference of the tax liability as advance tax in case the amount of difference exceeds Rs 10,000 for all the income taken together. So pay the advance tax in case your case fits into this situation. Please note that you do not have to pay any advance tax if you are or have completed 60 years of age and are not engaged in any business or professional activity.

Minimum contribution to PPF, NPS a/c

This is for the persons who have opened a PPF account either in their own name or in the name of their children as well. It may so happen that you have already exhausted the deduction available under Section 80C through other means and need not contribute any amount to the PPF account, you still need to contribute the minimum amount of Rs 500 every year in each of the PPF account to avoid the account becoming dormant. The dormant account can be made active by payment of Rs 100 as penalty and contribution of Rs 500 for each year of default.

Likewise, in case you have opened an NPS account, there needs to be minimum deposit of Rs 6,000 every year in the account.  So in case there are not adequate credits in your NPS account during the year, please deposit the minimum amount so as to avoid the account categorised as frozen. The frozen account, however, can be made active by paying a penalty of Rs 100 and one contribution of Rs 500.

Please note that the amount to be deposited is only one time and not in respect of each of the years of default.

Verify the amount of deduction available from your bank records

For various amounts eligible for deduction under Section 80C we avail the facility of ECS in our bank account like life insurance premium, SIP for equity-linked insurance schemes etc. It may so happen that the ECS might not have hit the bank account due to any reason or even in case you have issued a cheque for the life insurance premium, the cheque might not have been yet presented to the bank. So  please verify and cross check that for all the eligible amount of deduction, the amount has in fact been debited in your bank account failing which you will not be able to claim the deduction available.

The author is Company Secretary, Bombay Oxygen Corporation Limited. 

The views expressed in this article are his own