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Income tax returns: Why salaried taxpayers are losing their sleep

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DailyBiteApr 21, 2018 | 09:16

Income tax returns: Why salaried taxpayers are losing their sleep

From this year, the salaried people will have to provide a detailed breakup of the income from salary: the taxable and non-taxable allowances.

With income tax department tightening its grip over salaried taxpayers this year, the focus of the annual narrative has shifted to this one question - how safe are the tax-saving methods? Also, salaried people are worried whether filing I-T returns has become tricky with a few new additions to the form.

Here is all that you need to know:

Salaried class under watch

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According to a PTI report, the department has cautioned the salaried taxpayers against under-reporting of income or “inflating” deduction while filing their returns. Taxpayers indulging in such practices will be prosecuted and their employers will be asked to take action against them, as this will be treated as tax-evasion. Government employees are also on the radar.

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Why this time

Earlier this year, the I-T department busted a racket run by a Bangalore-based chartered accountant that helped staff of about 50 companies file false tax returns. The companies included IBM, Vodafone, Infosys, ICICI Bank etc. According to a Business Standard report, the CA filed "nearly 1,000 returns with loss from house property, aggregating to loss claim of Rs 18 crore". The probe now rests with the CBI.

Salaried people will have to show more salary breakups 

Until last year, the taxpayers had to mention the taxable income in ITR1 and income from property in ITR4. From this year, the salaried people will have to provide a detailed breakup of the income from salary: the taxable and non-taxable allowances. These details are on Form 16, which the employers issue to the employees. However, these breakups could have been available to the Central Board of Direct Taxes (CBDT) as the employers submit the same details of TDS.

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ITR1 is not for NRIs anymore

Again until last year, NRIs could also use ITR1. But from this year, this form will be used by only those who qualify as a resident of India whose total income (from salary and other sources, including one house property) is up to Rs 50 lakh. Those who have a foreign bank account or any foreign transactions have been moved to ITR 2. Also, salaried people with an income exceeding Rs 50,000 will have to fill up ITR2.

The other six forms, which are not for most of the salaried people, have also undergone a few changes. Disclosure of gender has been done away with, while disclosure of income earned from carbon credits have been made mandatory. Political parties will have to make a declaration whether it has received any cash donation in excess of Rs 2,000.

Last updated: April 21, 2018 | 09:16
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