Common Income Tax Filing Issues with Solutions for Salaried

Salaried employees earning more than Rs 2.5 lakh are required to file an income tax return (ITR). It is possible for employees to reduce their overall tax outgo through various provisions in the income tax rules. Despite their tax-saving potential, many employees fail to take advantage of these provisions. There are five common problems salaried employees face and their solutions are presented in this article.

Salaried Employees Are Unaware Of Deductions Available

Many salaried employees don't know about the deductions they can claim in addition to Section 80C. The following deductions must be made aware of for tax planning purposes, i.e. 80CCD (1B), 80D, 80E, 80EEA, 80EEB, 80G, 80TTA, 80TTB and 80U.

Due to Many 16 Forms, Less TDS Deducted

Due to standard deductions and the Basic Exemption, TDS is less deducted when an employee changes jobs, so at the time of filing income tax returns, the employee ends to pay self-assessment tax along with interest. 

Hence, employees should declare their previous employer's income to their current employer so that it gets reflected on Form 16 as well, and TDS is incorporated accordingly.

Unable to Claim HRA (House Rent Allowance)

HRA documents are frequently not submitted to employers on time by several employees. HRA exemption is not considered by the employer when calculating income tax liability, resulting in a higher TDS deduction throughout the year. Tax experts advise employees to avoid such a situation by taking the following steps:

• At the beginning of the year, provide a declaration of rent
• Provide the employer with rent receipts, rent agreements, and other documents as soon as possible.
• Unless he receives HRA from his employer, he can deduct up to 60000 u/s 80GG.

A Penalty for Non-payment of Advance Tax on Non-salary Income

Many salaried employees mistakenly believe that their employer is deducting TDS and they are not required to pay advance tax. As a result, interest and penalties are incurred at the time of filing a return under income tax sections 234B & 234C.

The following steps should be taken by employees to prevent such situations:

• At the beginning of the year, the employee must declare all other income besides salary to the employer
• In order to avoid penalties, 90% of the total tax liability has to be paid before the end of the financial year

Missing Income Reporting in AIS (Annual Information Statement)

In the event that AIS is not checked or income reflected in 26AS does not match, a salaried individual may underreport his income.

Whenever there is a discrepancy in form 26AS, the employee needs to match the figures with the employer/Form 16 to ensure accurate reporting. Salaried employees are also required to report all income showing in AIS and correct the information if it is inaccurate in AIS by providing feedback online or offline.