You can also refer to a popular, old but relevant video of Miss Rounak Jain to understand the TDS on purchase of Property. Click on the image
Form 16 is a certificate issued by an employer detailing the total amount of salary paid to an employee and the tax deducted at source (TDS) on that salary. It is crucial for filing your income tax return (ITR) as it serves as proof of the taxes you’ve already paid.
When you change jobs within a financial year, you receive a Form 16 from each employer. While each employer deducts TDS based on the salary paid during their tenure, they may not account for your total income for the entire year. This can lead to under-deduction of TDS.
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Let’s say you worked with Company A from April to September and then joined Company B from October to March. Both companies deduct TDS considering their respective payment periods. However, your total income for the year is the sum of salaries from both companies. Since each company doesn’t have a complete picture, TDS might be deducted at a lower rate than necessary.
Higher Tax Liability at Year-End: When you file your ITR, you may find that you owe additional taxes because the TDS deducted was insufficient.
Interest and Penalties: Under Section 234B and Section 234C of the Income Tax Act, you may have to pay interest on the unpaid tax liability due to under-deducted TDS.
Inform Your New Employer: When you join a new company, inform them about your previous employment and provide them with details of your previous salary and TDS. This will help them calculate TDS more accurately.
Submit Form 12B: You can submit Form 12B to your new employer, which contains details of your income from the previous employer. This ensures that your new employer deducts TDS considering your total income for the financial year.
Review Your Form 26AS: Form 26AS is a consolidated statement of your tax deducted and deposited. Regularly review this form to ensure that TDS has been correctly credited to your account.
Estimate Your Total Income: Calculate your estimated total income for the financial year and determine the approximate tax liability. Compare this with the TDS deducted by both employers and pay any advance tax, if required, to avoid interest and penalties.
While job changes can offer great career growth, they also bring financial responsibilities, especially when it comes to managing taxes. By being proactive and ensuring accurate TDS deductions, you can avoid the shock of a higher tax liability at the end of the financial year
This IT return form is to be used by a resident individual whose total income for the year includes:
This IT return form is to be use by an individual or a Hindu Undivided Family (HUF) whose total income for the year includes:
This Return Form is not applicable for individuals whose total income for the year includes Income from Business or Profession. For reporting such income, you may need to utilize either ITR-3 or ITR-4.
ITR-3 Form is intended to be used by those individuals or Hindu Undivided Families who are having income from a proprietary business or who engaged in a profession. Individuals falling under the below mentioned categories are eligible to file ITR-3:
The current ITR-4 form is applicable to individuals, Hindu Undivided Families (HUFs), and Partnership firms (excluding LLPs), who are residents and whose total income includes:
It’s important to note that individuals earning income from the above mentioned sources as freelancers can also choose the presumptive scheme if their gross receipts are not more than Rs 50 lakhs.The presumptive income scheme under sections 44AD, 44AE, and 44ADA is when an individual or entity opts to calculate its income based on a presumed minimum rate, typically a percentage of gross receipts or turnover in case of 44AD.44ADA, or based on the ownership of commercial vehicles in case of 44AE. However, if the business turnover exceeds Rs 2 crore, the taxpayer must file ITR-3.
ITR-5 is meant to be filed by the entities such as firms, LLPs (Limited Liability Partnerships), AOPs (Association of Persons), BOIs (Body of Individuals), Artificial Juridical Persons (AJPs), Estates of deceased individuals, Estates of insolvent individuals, Business trusts, and investment funds.
For companies other than those claiming exemption under section 11 (Income from property held for charitable or religious purposes), this return must be filed electronically only.
For individuals and entities, including companies, required to submit returns under section 139(4A), 139(4B), 139(4C), 139(4D), 139(4E), or 139(4F):
Return under section 139(4F) must be filed by any investment fund referred to in section 115UB, not obliged to furnish a return of income or loss under any other provision
Intimation or notice u/s 143(1) of Income Tax Act. 1961, is preliminary processing of return filed by you and its a computer generated automated message which lets the taxpayer know of any error that exists in his/her tax filing. It also makes comparison of income declared by assessee and income considered by the income tax department and based on that it shows if any refund is receivable or demand is payable.
The Section 142(1) of the Income-tax act 1961 gives power to Income-tax authorities to issue a notice for more information and for further clarification about where a income tax return is filed and if the same is not filed, then to furnish the required information in a prescribed manner. However if you don’t comply with this notice and don’t reply then in such case, a penalty of Rs 10,000 can be imposed u/s 271(1) (b).
Your case also can go for “Best Judgement Assessment” u/s 144, where the assessment will be carried out as per the best judgment of the Assessing Officer on the basis of all the relevant material and information available with them.
Prosecution u/s 276D for up to 1 year with or without a fine can be initiated. Search u/s 132 can also be initiated.
This is also known as scrutiny notice. If notice u/s 142(1) is issued and you have submitted documents and AO (Assessing officer) was not satisfied with the produced documents or may be you have not submitted documents or AO has not received any documents and the assessing officer has reason to believe that income is understated, less taxes paid or incorrect losses claimed, then Notice under Section 143(2) is issued which means your return has been selected for detailed scrutiny by your Assessing Officer and further information may be called upon.
This is also known as defective return notice. Purpose of this notice is to correct errors in return and make sure that income tax return provide complete and precise information. This notice is generally issued in case
1) ITR is incomplete
2) Mismatch or missing tax information
3) TDS credit is claimed but corresponding income is not offer to tax or less offered in comparison to 26AS
4) Wrong ITR filed etc.
Section 148 of income tax act 1961 gives authority and power to the Assessing Officer to issue notice to a taxpayer whose income has not been properly assessed. This means that if the Assessing Officer has reason to believe and doubt that a taxpayer has not disclosed complete income or has provided an inaccurate information of it, officers can commence proceedings under this section.
Notice u/s 156 is also known as Notice for income tax demand notice. This notice is issued by the Assessing Officer when any tax, interest, penalty, fine, or any other sum is payable by the assessee as a result of any order passed under the Income Tax Act. The notice specifies the amount and the due date of payment for the same, which is usually 30 days from the receipt of the notice.
This is an intimation and informational notice.The notice u/s 245 is issued by income tax department to take confirmation from assessee’s side for adjusting the pending tax to be paid by assessee for any of the previous years from the current year’s refund. This proposed adjustment intimation allows taxpayers to respond and express whether they are in agreement or disagreement with the proposed adjustment.