Pay attention to TDS before filing returns

Gather all the relevant TDS certificates/details and make sure the deductions are all captured in the return

The income-tax return filing season has begun, with the new return forms (ITRs) for this year notified in April and the income-tax department’s e-filing website, enabling filing of ITRs 1-4, earlier this month. While you gather details of your earnings on one side, you must also make note of the already deducted taxes on the other. Here’s what you need to know with respect to TDS before you file your return this tax-filing season.

Form 16

If you are a salaried, you will be receiving ‘Form 16’ or ‘certificate for tax deducted at source on salary’ from your employer now. Form 16 will reflect your earnings and the taxes deducted by the employer for 2018-19. If you had earlier declared your other sources of income, apart from salary, to the employer as also the tax-saving investments, the employer would have deducted the taxes in such a way that your additional tax outgo at the time of filing the return would be minimal.

Look out for additional disclosures in Form 16 this year, for the format has been changed recently. The new form will now contain more details related to salary income such as tax-free allowances, exemptions and deductions being enjoyed by the tax payer. With the new tax return forms too calling for detailed information under the salary head, these changes will make it easier for the department to compare and find out discrepancies between Form 16 and the ITR.

Other TDS

Not only the employer, but also other institutions give out their statements of tax deductions. For instance, if interest earned on a bank fixed deposit is over ₹10,000 (₹40,000 from 2019-20 onwards), banks will have to deduct 10 per cent TDS on the interest and give out Form 16A to the depositor, with details of the taxes deducted.

Similarly, if you have deposits with corporates or other finance companies, a 10 per cent TDS is applicable if the annual interest payment exceeds ₹5,000. If you withdraw your EPF balance before five years of continuous service and the withdrawal amount is ₹50,000 or more, the EPFO has to deduct tax at 10 per cent. If you have sold any property during the year, the buyer has to pay the consideration after deducting a TDS of 1 per cent, if the sale consideration exceeds ₹50 lakh. TDS at 5 per cent is also deducted on rent receipts exceeding ₹50,000 a month.

Before you file your returns, you must gather all the relevant TDS certificates/details and make sure that the deductions are all captured in the return.

Matching with Form 26AS

The TDS you claim in your return should match the TDS for your PAN, captured by the tax department in Form 26AS. Form 26AS is a statement of tax credit generated by the tax department, based on your PAN number for every financial year. It contains details of the tax deducted on your behalf by employers, the bank/institution in which you have an investment and sale/purchase or rent of immovable property.

Form 26AS can be viewed through your net banking account or by registering on the TDS reconciliation website — TRACES — or by logging into your e-return filing account on the tax department’s website. To calculate how much you owe, the tax officer matches the details in your Form 26AS with what you have declared in the tax return. Hence, it is vital that both the documents are in sync. If there is a mismatch, problems can crop up when your return is processed. A discrepancy can result in the department asking for more taxes according to their calculations.

Avoiding TDS

If your income is below the taxable limit for any year, you must submit Form 15G (Form 15H for senior citizens) to the entity liable to deduct TDS, informing them of your tax-free status. If you did not do it last year ( 2018-19) and found that TDS has been deducted, remember that you need to file your returns for income earned during 2018-19 to claim a refund of the TDS.

At the same time, remember to submit Form 15G for 2019-20 as soon as possible, if you feel that your income is not going to cross the basic exemption limit this year too.

Apart from banks, forms 15G or 15H can also be submitted to institutions such as companies issuing bonds, employee provident fund organisation (EPFO) and insurance companies that pay commission.

You can also obtain a certificate of lower or NIL TDS from the assessing officer by submitting Form 13. This will help avoid money from being locked up until the credit of the refund. You also need not file return just for the sake of claiming the refund.

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