Saturday, July 5, 2014

Tax Return Filing Season is here – 11 Things to keep in Mind!

Online Tax return filing for Indians for FY 2013-14 would be different in many ways. However, one thing which really stands out is that it will have more tax payers under its ambit in compare to any previous year since now it is mandatory to e-file your tax return if your income is more than Rs.5 lacs.  This article would stress on 11 things which a tax payer should keep in mind while e-filing his tax return, especially first time filers.

1) Permanent Account Number - This is a unique alpha-numeric number allotted to you, which basically is the base identifier for all correspondence with the IT department. Thus it is of paramount interest to double check the PAN number while e-filing your tax return. 

2) E-mail Id – IT has become hi-tech and moving towards paper less environment, wherein most of the correspondence from them, including ITR acknowledgment and intimation would come to the email id you provide in the tax return.  

3) Your Bank Account Details - This would contain your bank a/c number, MICR code and from this year onwards one more mandatory detail is required i.e., IFSC code of your banker.

4) Correct ITR Form - It is very important to select the correct ITR form that is applicable to you for E-filing of tax return as the government has made various changes in regard to the selection of ITR forms for different assessees. If you fail to select correct form then your IT Return may be regarded as defective return. 

5) Check Form-26AS before filing- The Government keeps record of all tax deposited/ credited to your PAN number. You can register with the e-filing site of IT Department to view your Form-26AS. It is important to note here that the information disclosed in your income tax return form should match with the details in your Form 26AS. Thus there is a need to check Form-26AS while doing e-filing your tax returns. 

6) Provide Details of all the Tax saving investments made by you- It is advisable that one should always make a list of Tax saving investments made throughout the year which are eligible for deduction under Chapter VI of the Income Tax Act, otherwise there is always a chance to miss those in the tax returns, and not claiming benefit on those. 

7) Filing ITR with Multiple Form16- Form 16 is a certificate issued by an employer to an employee who provides details in respect of salary earned by the employee and tax deducted at source by the employer. Tax payers often get confused regarding how to file their income tax return with multiple Form16, wherein they have worked for more than one employer in a financial year.

8) Interest on savings bank account is taxable- Interests on savings bank account, post office savings and savings in cooperative banks are taxable when amount exceeds Rs.10000. Thus if you have such income then you should disclose it the income tax return. Only saving bank interest income is exempt upto Rs. 10000, and this fact misunderstood. For example, interest on fixed deposit and recurring deposit are fully taxable income which is to be shown under the head “income from other sources”. 

9) Exempt income need to be disclosed separately in the returns - It has been noted that many tax payers do not disclose exempt incomes in their income tax return on the contention that they are not taxable. IT department has taken this very seriously by making ITR 2 applicable to tax payers, who have exempt income of more than Rs .5000, thus they can’t file ITR 1.  Thus, it is advisable to disclose all exempt income at the required schedule in the ITR return. 

10) Mailing ITR-V submission is a must when ITR is uploaded without digital signature – ITR-V (income tax return verification ACK) is generated when a ITR is uploaded online without use of the digital signature. ITR-V ACK is required to be mailed to the CPC, Bangalore within 120 days of the upload of the ITR online. Upon the receipt of this, the CPC sends a final Acknowledgement to the email id. 

11) Keep documentary evidences of all the information you give- Last but not the least, tax payers should look to properly maintain all the documentary evidence that is associated with the filing of return which the assessing office might call upon in future. 

About Author:
Alok Patnia founded to understand and address the pain points of individuals, businesses and startups. He is an expert in handling ITR filing, has great insights on the business startup issues such as choosing right business entity and also has vast experience in the field of business maintenance services such as accounting, auditing, company law compliances, service tax and other related fields.

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Friday, July 4, 2014

Should You Consider a Pension Transfer?

Transferring a pension isn’t the right move for everyone to make, as we all have to consider different circumstances when making our decision. However as this article reveals, there are some situations in which transferring your pension fund could turn out to be a very good move indeed.

The process of setting up a pension seems to be rather simplified when you first look at it. You consider where to start up your private pension, get everything set up and then start paying into it every month. Job done – or at least you would think that was the case.

In reality people sometimes change their plans regarding their pensions, and there can be some very good reasons why this might happen. For example it is generally accepted that the best pension to have is one that your employer provides for you. This is because they pay into it as well as you, so every month you have two lots of payments going into your pension pot.

However if you leave that job and move on to another one, you will retain your pension pot from the first employer and start a new one with your next one. You can keep your pension pot growing with the first employer’s scheme if you wish, but nothing else will be going into it each month. You may have the option to go for a pension transfer in this situation if there are benefits to doing so. It is always wise to seek proper independent advice on this matter as no two situations will be exactly the same. Don’t make a decision now based on your own point of view as it could be the wrong one to make.

Since most of us change jobs and companies through our working lives, it is not unusual to end up with several pensions held with different companies and schemes. There are often advantages to bringing several smaller pensions together and putting them all into one single pot. For instance in some cases you can pay lower charges by having a larger amount in one pot instead of having your pensions spread around in different places. You need to work out your sums and assess what is best in your case though before deciding what to do.

There is also the chance that old pensions that you haven’t paid into for years could be achieving a very poor return for you. When you leave a particular job it is easy to forget about the pension you had there, even though you should still have the paperwork from it. In fact if you suspect you may have a pension you haven’t thought about (or paid into) for a while, now is the time to do something about it. If you find a pension like this is performing badly you should almost certainly transfer it elsewhere. However as we have mentioned before in this article, do seek professional advice before doing this to make sure you have covered all your bases. You want to make the right decision now to put you in a better financial position in the future when you do eventually retire.

As you can see there is a lot to think about and the idea of transferring a pension should not be taken lightly. The more advice you get now, the better off you are likely to be in the future.
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