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Salaries and the tax conundrum

Those individuals not using special software created to fill in the income tax returns are finding the going tough as they find several details difficult to fill in, Arnav Pandya tells more.

india Updated: Jul 24, 2007 01:56 IST
Arnav Pandya

The new income tax returns are meant to be easy and simple to fill in especially for individuals. But those individuals not using special software created to fill in the returns are finding the going tough as they find several details difficult to fill in. While one would think that the process would be very simple for those who have salary income as this will not result in much complication are in for a surprise because even this category is experiencing difficulties.

ITR-1 is very simple to fill in but the problem for a large number of people is that they do not qualify to use this return because of the presence of income from house property or even some dividend income. This makes them use ITR-2 and there are some areas where people using physical return forms will run into problems. Here are a couple of such issues.

The first confusion arises when the individual goes to fill in the details related to salary income itself. There is a schedule where the salary details have to be entered and the final figure here is carried forward to the computation part where all the income under different heads is added up.

In the schedule there are several rows that ask for different information to be filled up. This includes salary, allowances exempt under Section 10, allowance not exempt, perquisites and profit in lieu of salary. The total of the relevant and taxable items here will lead to the total of income under the head salaries.

It is at this stage where the confusion arises because of the fact that there is no space present for the deduction that will be available for the profession tax that has been paid during the year. The Form 16 given by the employer will clearly mention this detail separately and the tax laws allow for this deduction but with there being no space in the return the salaried are in a bit of bind as to how this be shown and where this has to be adjusted because it is a benefit that they have to be receive.

The next confusion for the salaried arises for those who have investments in several areas like a bank, deposits and other interest where there is a tax deduction at source. A large number of such items have the potential to cause additional problems. Earlier the easier way out for the person was to attach all the required tax deduction at source (TDS) certificates with the return. Now this is not possible because nothing has to be attached with the returns but there is space that has been provided in order to enable the tax payer to enter the required information.

There is space only for a limited number of TDS certificates information to be entered in a physical form. This can be a cause for problem for those who have say investments in 5 banks or other entities from which they receive a TDS certificate each. In such a case there will be a problem relating to the showing of al the required information and the manner in which this will be done.

If all this is not enough then there is also the question of figuring out what is exactly required in areas where various section numbers are mentioned. This along with the legal language that is used in describing the various items under the form is another area of confusion for the salaried.