Switched jobs? Consolidate multiple Form 16 s accurately

If you find any discrepancy in Form 16, request employer t amend it

Over the next couple of months, salaried individuals across the country will turn their attention to filing their Income-tax return (ITR), Central to this task is Form 16, a certificate of tax deducted at source (TDS) issued by employers to their employees. Companies’ human resources of departments have started emailing it to employees. Form 16 contains details of salary income, deductions, and is crucial for accurate filing of tax returns.

“Employers should finish form 16 to employee by June 15 of the subsequent financial year. For instance, employee should receive their Form 16 for the fiscal year 2022-23 no later than June 15, 2023, “he says.

Form 16 consists of two parts: Part A and Part B. Part A include essential details such as taxpayer and employer information, service period, and the amount of tax deducted. Part  B gives details of the tax computation carried out by the employer.

Review Form 16

Upon receiving Form 16, employees should carefully check basic details, such as permanent account number (PAN). If the PAN is correct, the tax deducted by the employer will not get reflected in Form 26AS, potentially affecting the employee’s ability to claim credit for it while filing the income-tax return (ITR).

Next, employees should review the accuracy and completeness of the information provided in Form 16. They should confirm that all the tax deducted. Compare the details of TDS form 16 with those in Form 26AS.

Form 26AS has details of all the payments made to the employee and the corresponding TDS. “Form 26AS reflects both the annual tax. Credit statement and the annual information statement (AIS), as well as personal details of the employee and the tax deduction and collection account number (TAN) of the employer.  “A careful comparison of the details in Form 16 and form 26AS help prevent discrepancies during the ITR filing process.

Apart from PAN, the employee should also crosscheck the accuracy of other personal details such as their name, address, employer’s TAN, etc. In case of any discrepancy in the details, employee may approach their employers. “The employer will amend the details; file a revised TDS return to credit the TDS amount against the correct PAN, and then issue an updated Form 16.”

“If the tax-savings deductions and exemptions claimed by an employee are not correctly reflected in Form 16, she can also separately claim such deduction or exemption while filing tax-return.”

If you have multiple Form 16s

If you switched jobs in 2022-23, you will get two form 16s-ones from your current employer and another from the previous one. “An employee who has switched jobs must inform her new employer about the details of her income from her previous employment via From 12.” The new employer will incorporate these details while computing the total tax liability.

Delhi High Court also underlines the importance of such as assesses consolidating all her Form 16s to accurately ascertain both the total income and the tax payable.

“Duplication of deduction must be avoided, particularly in areas such as standard deduction, leave travel allowance (LTA), house rent allowance (HRA), and other exemptions under Section 10 of the Income-Tax Act.” The TDS amounts from multiple Form 16s should also be aggregated.

Finally, it is important to maintain proper documentation even after filing your tax return. “Keep copies of all your Form 16s and related documents to substantiate your income and tax deductions. This documentation will come in handy during a tax assessment or audit in the future.”

MULTIPLE JOBS BUT ONE FORM 16

When you only have Form 16 from your current employer, collect salary slips and salary break-up from your previous employer

Compute total gross salary by adding income from Form 16 (form current employer) and income from salary slips (from previous employer)

Deduct tax exemptions (HRA, LTA, etc) and standard deduction from salary income.

Claim deductions under Section 80C, 80D etc from total taxable income (salary income, interest income from savings and term deposit, etc)

Once net taxable income is calculated, calculate income-tax liability, and deduct TDS

If there is any additional tax liability, pay it first before filing return.

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 Report crypto income accurately to avoid  mismatch during verification

Every year some changes made to the income-tax-return (ITR) forms. Taxpayers need to be cognizant of them before they start the process of filling their returns.

Income from VDAs

The tax authorities have introduced a separate “schedule VDA” in the new ITR forms 2,3,5,6 and 7, respectively, for reporting income from virtual digital assets (VDAs), which include crypto currencies and non-fungible tokens (NFTs).

Taxpayers are required to disclose the details of each VDA transaction, including the sale and purchase dates. The purpose is to make it easier for the tax authorities to see if tax has been paid on VDA-related activities.

“Taxpayers must not skip any of these details, particularly since VDA exchanges and other similar entities in India may also provide inputs to the department as part of their reporting requirements. Any mismatches in declarations can lead to tax liabilities for taxpayers.”

Provide donation reference number

Taxpayers must disclose the application reference number (ARN) for donations eligible for Section 80G deductions. “To ensure compliance, taxpayers must obtain the ARN from the donation certificate issued by the done institution using Form 10BE. The ARN should be included in the ITR for accurate reporting of eligible deductions”

The ARN is a unique reference number that is mentioned in Form 10BE, the donation certificate, or donation claimed for Section 80G deductions. It curbs bogus donations that were used to defraud the exchequer.”

Income from intraday trading

The reporting requirements for intraday trading have changed. “Now, the profit or loss from intraday trading shall be considered business income rather than income from capital gains.”

The new ITR forms features a dedicated section on ‘trading account’ for reporting intraday trading operations. Here, details of turnover and income transferred to the profit and Loss account have to be provided.

“Maintain through records, consult a tax professional if needed, and stay updated with the regulations to ensure proper compliance with the reporting guidelines.”

Income from retirement benefits accounts

The ITR forms have been updated to include new disclosure requirements: income from retirement benefits accounts. Taxpayers must now disclose any taxable income on which relief under Section 89A of the Income –Tax (I-T) Act was claimed in previous years. The Fiancé Act, 2021, had inserted a new Section 89A in the I-T act , 1961, to provide  relief to residents who have income from foreign retirements benefits accounts.” Income from retirement benefit accounts is a dedicated section in the ITR forms that mandates taxpayers to disclose income derived from pension funds, annuities, or other retirement benefits schemes.”

The disclosure requirements also extends to taxable income on which relief was claimed under Section 89A of The I-T Act in earlier years, “Section 89A provides relief to individuals who have received arrears or additional income in a specific financial year, ensuring accurate calculation of tax liability. “For instance, let’s consider the case of Kumar, a taxpayer who received income from a pension fund and claimed relief under Section 89A in a previous year. In the current financial   year, Kumar earned Rs 5 lakh from his pension fund. During the previous year, he received arrears amounting to Rs 2 lakh.

When filing his ITR in the updated form, Kumar must disclose the Rs 5 lakh income from pension fund. Additionally, he must provide information about the Rs 2 Lakh arrear that was subject to relief under Section 89 A in the appropriate, he must provide information about the Rs 2 lakh aurorally, he must provide information about the Rs 2 Lakh arrear that was subject to relief under Section 89 A in the appropriate, he must provide information about the Rs 2 lakh arrear that was subject to relief under Section 89A in the appropriate disclosure section. Finally, “Taxpayers must pay attention to changes in residency status, especially if they have become non-residents. When filing your ITR, accurately disclose both of income from retirement benefits withdrawal and the taxable income resulting from relief claimed under Section 89A.”

HOW TO ENSURE ACCURACY IN REPORTING VDA INCOME

When filing tax return in the amended ITR forms, disclose income from virtual digital assets accurately

Indicate whether the income should be categorised as business income or capital gains and report it under the relevant head of income

To ensure accurate reporting, check Form 26AS which is a tax credit statement

Also check annual information statement, which provides information on tax deducted at source (TDS) under Section 194S

Verify that the income from VDAs, subject to TDS, has been properly included in the I-T return.

For More Details: Pooja Manoj Gupta, visit www.giia26.com
Email: pmgiia26.com Mobile 9868944340

 

 Respond to I-T notice on time or risk refund adjustment

If AO doesn’t get back within 21 days, CPC may release refund or adjust it partially

Have you received a notice under Section 245 of the Income Tax (I-T) Act? If so, consult your chartered accountant and respond promptly. The Directorate of Income Tax (Systems) has now set a 21-day time limit for an assesses to respond to an intimation under section 245 (1) of the I-T Act, issued by the Centralised Processing Centre (CPC).

 “The time limit set for assesses aligns with the 21-day response period fixed for assessing officers (AOs) to respond to an assesses grievance. These timelines will facilitate prompt responses from both sides and aid in streamlining the issuance of refunds.”

Why the change?

The I-T department was informed that in many cases AOs failed to respond within the stipulated 30 days. This caused delays in issuing refunds, gave rise to grievances, and created an additional interest burden under Section 244 A on the Revenue.

Understanding Section 245

Section 245 of the I-T Act outlines the procedure for setting off refunds against any outstanding tax liability. When a refund is due, the CPC sends a prior notice, alerting the taxpayer about the opportunity to use this refund to offset any legitimate tax liabilities.

“The aim of the notice issued under Section 245 (1) is to utilise the refund amount to offset any pending tax dues before issuing the refund to the taxpayer. The notice also gives the taxpayer an opportunity to address any grievances or disputes they may have regarding the demand and allows them to approach the AO within the specified period.”

When taxpayer disagrees

In case where the taxpayer either disagrees or partially agrees with the adjustment, the CPC needs to immediately refer the matter to the AO. The AO then has 21 days to provide feedback to the CPC about whether or not the adjustment should be made. “If no feedback is received from the AO within 21 days, the CPC has the power to either release the refund without adjustment or adjust it to the adjustment by demands agreed for adjustment by the assesses.”

The AO is then held solely accountable for the consequences of no response or delayed response. “If a partial adjustment has to be made, the amount of demand to be adjusted for each year should be specified in the tax portal.”

Delays can be harmful

What happens if the taxpayer fails to respond within 21 days? “The outstanding tax demands will be adjusted against the refund due to the Revenue.”

Failing to respond to the notice can have other consequences. “They may calculate the penalty or the outstanding amount you owe for that specific assessment year without seeking your confirmation.”

What experts suggest

Read thoroughly and understand any communication received from the CPC. If you have any grievances or disputes regarding the demand stated in the notice, consider seeking professional can guide you through the process and address your concerns effectively.”

Respond within the prescribed 21-day period.

“Retain all necessary documentation, including the notice received, your response, and any supporting evidence, in case you need to refer to them in the future.” If you responded on time, then follow up and ensure that your concerns are addressed and the necessary action is taken.

Senior citizen taxpayers may struggle with the online system and should hence seek professional help.

STEPS TO CHECK FOR OUTSTANDING TAX DEMAND

You can check if there is any outstanding demand through the e-filing portal

Log in to the e-filing portal and click ‘Pending Actions’, then on ‘Response to Outstanding Demand’

If there are demands against your Permanent Account Number, the current status of each of the past or existing outstanding demands will be updated as ‘Pending payment’ or ‘Response’

You can click on ‘Pay Now’ or ‘Submit Response’

Additionally, you will receive a message on your email and mobile registered on the e-filing portal.

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Email: pmgiia26.com Mobile 9868944340

 

 Monsoon-proof your vehicle with engine protection covers

If you own an EV, Buying a battery-protection add-on would be prudent

The India Meteorological Department (IMD) has predicated a fifth consecutive year of normal monsoon. A good monsoon, while essential, presents challenges for car owners who live in areas prone to heavy rains, floods, and water logging.

President-retail business, HDFCERGO General Insurance says ’”For such geographies, it’s always wise to choose a few add-ons to protect against potential damages that might unexpectedly arise during the monsoon season.”

Pre-monsoon vehicle maintenance should be your first step. If you only have third-party insurance, get a comprehensive cover. Next, buy a few relevant add-ons to avoid having to pay for certain cost out of your own pocket. Let us discuss two must –have add-on first.

Engine protection cover:

A comprehensive policy typically doesn’t cover damage to the engine or the gearbox due to water logging. “This add-on safeguards the engine against part like the cylinder head, piston, and crankshaft, among others. These parts aren’t covered unless you buy this specific add-on. ”Ghosh warns that repair costs can mount to several lakh if parts of the engine have to be repaired or replaced.

Electric car owners must park their vehicles on elevated ground so that it does not remain submerged overnight. Ramalingam stress the importance of buying a battery protection add-on cover of safeguard against the cost of replacing the battery.

Roadside assistance cover: This is another must –have cover during the monsoon. “This cover proves especially handy when your vehicle breaks down mid-journey and is immovable. If you have this cover, a professional technician will arrive at the site to repair the damage.”

Ramalingam points out that this add-on provides multiple benefits-including towing, taxi, fuel, flat tyre support, and medical coordination. A ward of caution here. Always buy this cover as an add-on from an insurer. In recent times, scammers have been targeting car owner with cheap “RSA” (roadside assistance) services. Having bought these two essential add-ons, you may consider a few additional ones.

Zero depreciation add-on:

This add-on, popularly known as the bumper-to-bumper cover, is relevant during the monsoon season, with its heightened risk of vehicular accidents due to slippery roads and impaired visibility, Normally, when a vehicle gets damaged and parts have to be replaced, the insurers pays the depreciated value of those parts. However, with a zero –depreciation coverage, the insurers bears the full cost. This add-on cover most automobile components fully, but offers only 50 percent coverage for batteries, tyres and tubes. The premium for this add-on depends on the vehicle’s age. While some insurers offer it until the vehicle is five year old, others extends it to older vehicle as well.

Return to invoice:

Goel explain that a return to invoice add-ons will compensate you for the full invoice price of your vehicle, rather than its insured declared value (IDV). If it’s stolen or damaged beyond repair. A vehicle‘s IDV is its depreciated ex-show-room price, which means you would only get a part of the total cost if the vehicle is stolen or irreparably damaged.

Key replacement:

This add-on covers the cost of replacing a car key. If it is lost, damaged or stolen. In high-end models, replacing the key can be expensive. “With the advent of sophisticated technologies such as Frequency-Operated Buttons (FOB), the cost of replacing the keys of luxury cars can be substantial.”

The insurers even compensate you for replacing the lockset, if necessary. Kumar adds, “Insures cover the cost of replacing the key and the lock if there is an attempt at theft or vehicle break-in, “On selection of appropriate add-ons, “If you own an expensive car, opt for return to invoice, zero depreciation, and key replacement covers. Owner of mid-and small-sized cars may avoid the increased premium that results from opting for these covers.”

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Email: pmgiia26.com Mobile 8882286639

 

 Upgrade your life insurance plans as you grow older

As life expectancy is now around 70 years, buying cover till 60 isn’t enough

AS ONE MOVES forward in the journey of life, financial needs, requirements, and obligations keep on changing. So, in the case of life insurance planning, one should upgrade, make changes in the life insurance plan’s as per the requirements and financial obligations. Different stages of life require different insurance.

Young and single: They are financially independent. With many youngsters involved in risky sports like river rafting or paragliding, personal accident and disability insurance is a must.

If one has taken an education loan, then in case of untimely death, it can be a huge burden on the parents. Hence, buying a term insurance plan can be useful here. Many people don’t consider buying a retirement plan at this age, but this should be the priority, as the magic compound interest with a hug accumulation period can do wonders to the retirement corpus.

Young, married couple with no children: Income is relatively high if both the partners are working. But the need for life insurance rises as financial interdependence is there. Buy life insurance with riders for personal accident, disability, and critical illness, consider a unit linked insurance plan at this age, as it can be good option for wealth creation.

Married, with dependent children: Income may reduce as one parent may have to stay at home or leave a job to take care of the child at least for some initial years. Expenses increase, as the requirement of baby care, medical care, and school /college fee in there. One must buy a term insurance plan if not bought yet as the future of the children can be stake in case of untimely death of an earning parent. But don’t forget to buy a term insurance plan which covers you till 85 years of age. As the average life expectancy has increased to around 70 years in India, covering oneself for only 60years make no sense.

Plan for your child’s future and accordingly buy child plan as due to increasing inflation rates, your savings may not be sufficient to sponsor the child’s education and marriage. Retirement planning should on the cards as that is one of the final financial goals of life, the earlier you start, the bigger the corpus.

Pre-retirement stage or an empty nest; at this stage, many people have already cleared their loans and other financial obligation. Assess your post-retirement needs and buy an immediate annuity or deferred pension plan with the help of a provident fund or gratuity amount paid by the employer.

While transitioning from one stage to another, don’t forget to upgrade the life insurance plan. Life insurance amount should be 20-25 times of the annual income. Also don’t forget to add change the nominee as per the changing needs of life. This will ensure that the policy benefits reach the right person.

  TAKING COVER

Buy a retirement plan when you are young to realize the magic of compounding.

Life insurance amount should be 20-25 times of the annual income.

Add or change the nominee as per the changing needs of life.

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Email: pmgiia26.com Mobile 8882286639

 

 Want immediate coverage? Go for diabetes-focused plan

A recent study published in The Lancet says that diabetes currently afflicts 101 million individuals in India. Another 136 million could be suffering from pre-diabetes. These figures considerably surpass the previous estimates of the World Health Organization, which had put the number of diabetics and pre-diabetics and pre-diabetics at 77 million and 25 million, respectively. Those sufferings from this ailment should consider purchasing diabetes- focused plans offered by insurers.

Getting coverage becomes difficult

Insurers regard diabetics as high-risk, “if unchecked, it can affect various organs such as the eyes, heart, nerves and kidneys. Such persons need to see a doctor frequently for complications arising from diabetes. The chances of hospitalisation increase. Hence, they tend to make more claims with their insurers.

Insurers are reluctant to cover diabetics under their standard health insurance plans, especially if they are above 50. Patients with high levels of HbA1C or those on insulin are likely to be denied coverage.

If a diabetic does manage to get covered by a standard policy, diabetes and its resulting complications get classified as pre-existing conditions, leading to a waiting period of two to four years. The premium also gets loaded.

Waiting period waived

Diabetes-focused plans offer inclusivity: they cover people already sufferings from his disease and its associated complications, “ they cover people who are on insulin, or have an HbA1C level above eight. Most plans cover both type I and II diabetes,”

Another pivotal feature is the elimination of waiting period for diabetes and associated conditions. “Coverage is available from day one,”

 Madhumathi Ramakrishan, senior vice president, Star Health & Allied Insurance, says these also offer focused coverage for diabetes-related complications. These include dialysis, kidney transplant, and eye complications, among others. These plans also offer outpatient department (OPD) coverage, encompassing consolations, diagnostics, and pharmacy expenses. “Diabetes, who is susceptible to frequent issues like hypoglycaemia, infections, injuries, etc., finds this feature valuable,

Furthermore, these plans offer routine health checkups. “Those who effectively manage their diabetes get discounts on their renewal premiums. These plans also function as standard health insurance plans, offering coverage for other ailments. Individuals with uncontrolled diabetes or associated complications such as renal failure or cardiomyopathy may not be eligible for coverage even under these plans.

 All the above-mentioned features could be offered as part of the main plan, or as a rider. The premium of these plans can vary significantly.” These plans could cost between 20 and 100 percent more than a standard health insurance plan,”

Run these checks 

The most critical point prospective customer should check is the waiting period for diabetes and related complications. Customers should also scrutinise the plan for sub-limits on room rent, doctor’s fees, and specific procedures. Buying a high sum insured (Rs 10 lakh and above) is crucial as diabetes patients require multiple treatments and hospitalisations. The plan should also offer sufficient OPD benefit.

“Unchecked diabetes can impact organs like kidney, so the plan must offer robust coverage for organ transplant. It must also cover cataract,”

A part from diabetes, check the waiting period for other pre-existing diseases too.

Make full disclosure

Compare the wide variety of plans available in the market before selecting one that suits your needs. “At the time of purchase, make a complete disclosure of your current health status and medical history, “says Ramakrishna. Any omission might lead to claim denial.

REDUCE WAITING PERIOD BY PAYING MORE

Insurer	Plan	Diabetes Type 1 (Insulin)	Diabetes Type-2 (Tablet)	Waiting period reduction option
CARE	Care Supreme Direct	Not covered	12,682	15,114 (After 30 days)
NIVA BUPA	Reassure 2.0 Bronze + (Direct)	Not covered	11,809	15,528 (Day 1, gold)
	Reassure 2.0 Platinum + (Direct)	Not covered	12,868	16,630 (Day 1, gold)
ABHI	Enhanced (Diabetes)	21,536	21,536	21,536 (OPD day 1 IPD 30 days)
	Essential (Diabetes)	18,939	18,939	18, 939 (OPD day 1 IPD 30 days)

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Email: pmgiia26.com Mobile 8882286639

 

 Have good credit score, need quick money? Opt for unsecured loan

Since the interest rate is high and the loan tenure short, evaluate your repayment capacity carefully.

The Reserve Bank of India (RBI) recently asked Indian banks to be vigilant about their retail portfolios, particularly the rapidly growing unsecured loans-such as personal loans and credit card loans-provide quick access to money when it is urgently needed, they also carry risks for borrowers.

Borrowers who can’t offer collateral have to take recourse to an unsecured loan.”They are a good financial option for people who don’t want to offer collateral. If you are in need of urgent cash loan without documents, unsecured loan could be your go-to-option. You can also apply for a personal loan to fund a major purchase or an event, home improvement, or to pay down higher-interest debt.

Quick disbursal

Unsecured loans are disbursed faster than secured loans.”Bring pre-approved, loan against credit cards are disbursed on the very day of application. Personal loans usually get disbursed between two and seven days. Many lenders also offer pre-approved personal loans to their select customers based on their credit profile. Such pre-approved personal loans usually have instant or same-day disbursal.

Credit score taken into account

A salaried individual having a good credit score can get an unsecured loan easily.”Lenders consider the applicant’s repayments capacity. They usually prefer those applicants whose equated monthly installments (EMI) obligation, including that of the proposed personal loan, is within 50-55 percent of the monthly income. Those exceeding this limit usually have a lower chance of approval. Ideally, all your EMIs put together should not exceed 40 percent of your home income.

High-cost loans

Banks perceive these loans as risky because they are not backed by any collateral (in case the borrower defaults). Hence, they charge high rates of interest on unsecured loans. Leading lenders charge up to 24 % on personal loan.”Unsecured loans are usually offered at much higher interest rates than secured loans to mitigate the lender’s risk. This, combined with the shorter tenure of 12-60 months, makes the EMIs for these loans high.

Evaluate repayment capacity

Borrowers should be careful when availing of these high-cost loans. “Borrowers who may not qualify for a secured loan but have a robust repayment plan in place may consider unsecured loans instead. But, in doing so, they must keep the high interest rate and the penalty factor in mind. They should make sure they have a strong repayment plan, given the loan’s short tenure and the prepayments charges.

Prepayment fee tend to be high in the case of unsecured loans. Those who don’t have a stable income should avoid these loans. Failure to pay EMIs on time will attract penalties and impact your credit score. ”Decline in credit score will make it difficult to avail another loan in the future”.

Scout for a good deal

If you have no option but to go for an unsecured loan, then do scout around for a good deal.”Compare interest rates. Also check the processing fee, prepayments charge, and late payment fee. And read the fine print of the loan contract to understand all the details,”

Choose a tenure that is easy on your pocket and doesn’t disturb your cash flow cycle.

Look for alternatives

Try to raise money from some other sources before opting for an unsecured loan. If you hold fixed deposits, you can take a loan against them at a lower cost. Gold loans and loans against securities also tend to be disbursed fast.

A top-up loan on your home loan may take a bit longer. Do check the loan –to-value ratio and interest rate before going for these options.”Gold loan, loan against property, home improvement loans, and loans against fixed deposits are alternatives you can go for to raise money at short notice,”

PERSONAL LOANS ARE RELATIVELY EXPENSIVE

LENDER	INTEREST RATE (% per annum)
HFDC Bank	10.50 to 24
ICICI Bank	10.75 to 19
Kotak Mahinder Bank	10.99   onwards
IndusInd Bank	10.49 onwards
Axis Bank	10.49 onwards

For More Details: Pooja Manoj Gupta, visit www.giia26.com
Email: pmgiia26.com Mobile 8882286639