Many people worry about the time of year when income taxes are due. The procedure for income tax filing may seem challenging, perplexing, or even terrifying. Additionally, a lot of tax return myths exist, which may make these emotions worse. In this blog, we aim to separate fact from fiction from some of the most common myths of tax filing and lead you through the tedious process of correctly submitting your income tax .
Myth 1: “Income Tax Returns are not mandatory”
Reality: There is no way that this myth is true. Tax returns are extremely important since they serve as base information for credit, a loan, and other financial instrument applications. In addition, skipping or missing file tax returns can result in severe consequences like interest on the outstanding balance, imprisonment, or even seizure of property.
Myth 2: “Tax Filing is a one-step process!”
Reality: Sorry to those who thought filing taxes would be a simple one-time process, but this myth needs to be proved wrong. Tax return filing is only one aspect of the picture. The process really starts after submission. Remember that errors could still happen, and adjustments might be required. Additionally, keeping up with changes to tax regulations, tax deductions, or credits may help your future returns. It is always recommended that even after submitting your return, to keep accurate financial records and take proactive measures to ensure the correctness of your tax information.
Myth 3: “Employing a tax professional is expensive and unnecessary”
Reality: Although there may be costs associated with engaging a tax expert, in many circumstances it can be a worthwhile investment. Tax experts are knowledgeable about tax regulations, allowing them to effectively maximise deductions and identify potential hazards that could lead to expensive mistakes. In the long run, tax professionals‘ expertise can save you time and money, especially if you have complicated financial issues.
Myth 4: “Tax filing is only necessary for people who are wealthy”
Reality: One of the most common misconceptions about filing income tax returns is that it is relatable to the wealthy. The truth is that, regardless of your income level, filing an income tax return is not only advised but also required if you have taxable income or fulfil certain requirements. Several factors like your age, work status, sources of income, and deductions affect whether or not you need to file tax returns. In fact, even if you don’t make enough money to pay taxes, you may still be required to submit a tax return in order to get credits or refunds.
Myth 5: “You need not file income taxes if you are unemployed.”
Reality: Tax return filing is not just for those who are employed, despite what many people think. Tax returns must also be filed by freelancers, the self – employed, entrepreneurs, and even students who are making an income.
Myth 6: “Receipts or proof are not necessary for relatively small expenses.”
Reality: It’s a common misconception among taxpayers that they don’t need to keep track of minimal expenditures, but this couldn’t be further from the reality. No matter how big the price, maintaining thorough records is essential for backing up your claims and preventing unnecessary hassles during audits.
Myth 7: “There will be no penalty if you file your income taxes late.”
Reality: If you owe taxes and fail to submit your return by the deadline, you will be subject to late filing fines, interest, and other penalties. If you don’t pay your taxes, the tax officials have every right to freeze your earnings, and your bank account, and even have to seize your property.
Myth 8: “While filing taxes, I am allowed to claim all of my expenses.”
Reality: The tax officials in India have set up strict guidelines about what expenses qualify as tax deductions and which ones do not. Making unauthorised expenditure claims may lead to an audit or other legal issues. For advice on whether expenses are allowable deductions, you can speak with a tax expert.
Myth 9: “You can’t deduct your house rent if you do not receive HRA.”
Reality: Under Section 80 GG of the Income Tax Act of 1961, you can still claim a tax deduction for rent paid even if you do not receive HRA (House Rent Allowance). You may still claim deductions on your house rent payments even if your company does not provide a House Rent Allowance (HRA) if:
- You do not possess any residential properties for which Section 23(2)(a) or Section 23(4)(a) requires the determination of valuation.
- If you have submitted your house rent declaration under form 10BA.
Final thoughts
In conclusion, filing tax returns is simpler than most individuals think. Taxpayers can easily complete their returns without needless problems by using the right resources, such as the e-filing software and tax professionals . It’s time to clarify these income tax misconceptions and concentrate on realising the significance of submitting an income tax return.
Frequently Asked Questions (FAQs)
- Where can I file income tax in Chennai?
Taxpayers can file their Income tax return (ITR) for the assessment year AY 2023-24 (FY 2022-23) without any hassle with the help of a professional tax consultant in Chennai.
- Can I claim HRA while filing income tax?
Rent receipts are proper proof of the rental payment to the employer for the purpose of claiming House Rent Allowance (HRA). After validating the same, the employer can grant deductions and allowances. The rent receipts serve as the basis for calculating the HRA allowance.
- Are gifts exempted from taxes?
Gifts received by any individual are subject to taxation in the hands of the recipient under the heading “Income from other sources.” As of June 2023, tax-free gifts up to Rs 50,000 are allowed per financial year.
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