Tuesday, 13 May 2014

Filing tax returns? Ways to avoid errors or invite a Tax notice

The government may be set to change, but the Income Tax Department’s drive for increased compliance continues unabated. The new tax forms notified by the department last month are aimed at seeking more details about your income, exemptions and expenses. Here are some of the changes that you should be aware of.

Details of exempt income

Until last year, taxpayers were required to declare their exempt income in the returns, but only had to enter a consolidated figure for the tax-free allowance they received during the year. This time, however, they will have to provide the details as well. “The new ITR-2 form requires taxpayers to give a detailed break-up of tax-exempt allowance in schedule S (for salary income),” says Vaibhav Sankla, director of tax consulting firm, H&R Block. Many employees get house rent allowance (HRA), leave travel assistance (LTA) and travel allowance as part of their salaries. These allowances are exempt if certain conditions are met