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Anybody who earns an annual income above INR 5 lakh must file tax returns. However, there are several myths associated with filing income tax returns. Here are nine common myths that may cost you if you are not careful:
E-filing is compulsory:
If you switch jobs during the financial year without disclosing the previous salary, the new employer will deduct tax on current earnings. However,tax liability is computed on total income during the year.
Your bank may levy tax deducted at source (TDS). However, you may still be liable to pay tax on interest earned via fixed account, recurring accounts, and savings accounts based on your tax slab.
Monetary gifts received from family at your wedding, charitable organizations, and inheritances are not taxable. All other monetary gifts exceeding INR 50,000 are taxable.
Even if your employer does not pay HRA, you are eligible to claim a deduction. The same is available under section 80GG if you:
on principal repayment of the home loan up to INR 1.5 lakh. Additionally, you may claim benefits for the interest payment for self-occupied and leased property.
You may think that providing details of only one bank account to claim a refund is enough. However, it is important for you to provide details of all the banks accounts that you hold to ensure the refund is received in the correct account.
One of the common tax filing mistakes is the belief that the process is complete once the returns are filed online. However, it is not complete until you receive acknowledgement stating that the income tax return (ITR) filing is successful. You also need to e-verify the returns using your Aadhar number, or send a copy of the acknowledgement to the Central Processing Center in Bengaluru.
While you may believe that online filing may increase the chances of an audit, in reality audits are not common. Only about 2% of the total returns filed are audited.
It is important to complete your tax planning well in advance to avoid any last-minute rush, thereby decreasing the possibility of costly mistakes.
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