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Filing taxes? 20 FAQs answered

July 16, 2008

7. What if I miss the deadline of July 31?

If there are no balance taxes to be paid, no interest or penalty will be levied if you file your return before 31 March 2009. However, there is a penalty of Rs 5,000 if you fail to file by that date. In case there are tax arrears, a penalty of 1 per cent per month will be charged as interest on the taxes due.

8. I took up a job in Bengaluru recently. My IT return was filed in Delhi till now. Where should I file it now?

You can file your IT return either in the city you are residing in at present, or in the city where your office is located. Since you have joined a company based in Bengaluru and also shifted your residence there, you will be required to file your return at Bengaluru.

You should write a letter about the change of your address to your current assessing officer and mark a copy of the same to your assessing officer in Delhi. You should also write to the IT Department to get your address changed in its PAN records.

It would be best if you enclose a copy of your previous year's return while filing your return at Bengaluru. This will serve as a ready reference for your current assessing officer.

9. I have misplaced my insurance receipt. Is it necessary to attach it and other relevant documents with the tax return?

No attachments are needed with the current ITR forms as the forms themselves capture most of the required information. You don't even need to attach the computation sheet with the form. After you submit the form, the IT department cross-references the TDS details using Oltas (Online Tax Accounting System). However, make sure to carry the photocopies of all the relevant documents to the income tax office.

10. Last minute planning can hurt. How do I prepare myself for next year?

This financial year (2008-09) would be better than the previous one as Budget 2008 has already brought a minimum of Rs 4,000 as tax savings for all the taxpayers. There is a gamut of instruments that can be used to avail deductions under Section 80C.

The mix taken usually depends on the safety, liquidity and term of the various instruments. However, most taxpayers generally forget to factor in whether the income generated by the instrument is subject to tax. It is at the fag end of the financial year that most salaried employees wake up to the need to save taxes through investments.

And in this last minute commotion and confusion, a lot investment happens in assets that are low on return, high on risk, or unsuited to the long-term financial objectives of the investor. As in life, it is always better to be an early riser in tax planning too and begin right at the dawn of a financial year, in April.

A deduction of up to Rs 100,000 is allowed from income every year on specified investments, expenses or payments.

Among these are bank deposits with a minimum period of five years, life insurance premiums, Employees' Provident Fund, Public Provident Fund, repayment of the principal amount on housing loans, tuition fees, National Savings Certificate and equity-linked saving schemes. Link tax saving investments to long-term goals. Gauge Section 80C instruments as tax savers and wealth creators by looking at their post-tax return.

Where do I file my return? Read on....

Image: A taxpayer looks through piles of tax forms | Photograph: Mario Tama/Getty Images

Also read: Tax: How you are affected
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