Moneylife Events
Filing I-T returns: What precautions to take and how to avoid pitfalls

Filing tax returns can be taxing if you don’t follow correct steps. In a packed Moneylife Foundation event on avoiding pitfalls and precautions to ensure safe tax filing, CA Ameet Patel covered all the critical aspects an individual tax filer needs to know and follow.

The salaried class knows how cumbersome tax matters are. They are weighed down by endless paperwork. It is complex, and we are never sure whether we have done it correctly. After the hard part is done and over, there’s still a chance that your tax return may be the one handpicked for scrutiny. This leads to tax notices and a nerve-wracking period to get your mistake rectified. So, how should one deal with the issue? Is there a simple way out? After all, it is estimated that 30% of tax returns have some flaws or the other. Moneylife Foundation invited Ameet Patel, a chartered accountant and a partner at Sudit K Parekh Group, to address these and other concerns of taxpayers in its 191st event “Pitfalls and Precautions on filing income tax returns” held on 13 December 2013 at the Royal Bombay Yacht Club.

The government has been pushing more and more taxpayers to file returns online. Those with more than Rs10 lakh income are required to file taxes online. While many often remain dependent on accounting professionals for tax computation, one can always verify or calculate his/her own tax liabilities. With the filing of income tax returns online it has become easy, especially for salaried people with a single source of income; however, if one has multiple sources of income, it can be very complicating. But are the innocent tax payers aware if all their income is duly reflected in the tax return, whether deductions claimed are genuine and whether the appropriate tax has been genuinely paid or not. The problem arises when a tax-payer’s return is picked up for scrutiny by the income-tax officer.

In an exhaustive presentation devoid of jargon as much as possible, Mr Patel covered tax filing basics, who should file tax returns, when it should be filed, penalties & interest in case of non-filing and which income tax form to use.

Mr Patel pointed out that to avoid getting caught in the scrutiny one must have at hand all documentary proof relating to the return. Among the documents required to be produced are the bank statement or pass book, dividend receipts, records of salary, interest income, gifts received and loans taken, proceeds from sale of shares/mutual fund units credited to the bank account and other credits.

The audience listened intently as Mr Patel described issues that could create problems for taxpayers. He pointed out that a salaried person should match the salary deposited in the bank with the amount entered in Form 16. The gross salary in the salary certificate, minus recoveries such as provident fund, profession tax, loan and TDS and non-monetary perks should ideally tally with the amounts deposited in the account. He also explained the importance of Form 26AS, which contains details about tax payments credited in the investor’s name in government records. You get credit for the taxes only if they appear in your Form 26AS which is a pass book of taxes. Every tax payer has a Form 26 AS. TDS credit claimed in the return of income and corresponding income should match with the information in your 26AS. Mismatch in tax returns can mean opening yourself for an IT scrutiny notice. Taxpayers should match every TDS entry-gross amount, date of deduction, etc, with their records before filing tax return.


If you have paid necessary taxes, filing tax returns in the correct way should ensure completion of the loop. Accurate and complete record-keeping throughout the year will help to make tax filing an easy process. E-filing can be a pain if you are not computer savvy, but with some learning and practice it can be smooth. Moreover, you can e-file for free on IT department website. Ensure that you give valid email address in your income tax returns. Experience suggests that refunds are received quickly in case of e-returns. Therefore, it is advisable to e-file your returns.

ITR-1 (Sahaj) is the most popular and simple form. But, individuals without business income should file ITR-1 or ITR-2? For assessment year (AY) 2013-14, individuals with exempt income of more than Rs5,000 cannot use ITR 1. Some examples of exempt income are: Dividend, Transport Allowance, House Rent Allowance (HRA), Leave Travel Allowance (LTA) and Interest on PPF (public provident fund).

Claiming deductions and exemptions should be inline with what is allowable and backed with documentation. Maintaining documents carefully and systematically was emphasised by Mr Patel, repeatedly. It will ensure that you can prove your point if any questions are raised in case of IT scrutiny, especially since these queries are raised years later. Among the documents required to be produced are the bank statement or pass book. Other important documents that a taxpayer must preserve are dividend receipts, records of salary, interest income, gifts received and loans taken, proceeds from sale of shares/mutual fund units credited to the bank account and other credits.

A return of income filed in time can be revised if one discovers any omission or any wrong statement therein, but before expiry of two years from the end of the relevant financial year (31st March).


Weekly Market Report: Nifty, Sensex on a downtrend
Nifty is on the downtrend on higher inflation, lower industrial output and tapering fears. Rallies are likely to be met with selling 
Last week, we wrote that the bulls lacked conviction to take the stock markets higher. And this is exactly what happened. The bulls couldn’t find a solid grip to take the stock markets higher, despite hitting an all-time high on Monday (you may want to check out on why Sensex all-time high was different from 2008). Barring Monday’s opening, the market has been weak throughout. Several indicators pointing towards a taper has spooked the bulls. Finally, Indian inflation figures rose and industrial production figures fell, as per data released on Thursday evening, which sent the markets down further on Friday, extended losses for four straight sessions. The RBI is likely to increase repo rates to control inflation. All this collectively doesn’t bode well for the Indian stock markets.  The BSE Sensex finished the week at 20,716, down 281 points, or 1.34%. The NSE Nifty finished at 6,168, down 92 points, or 1.46%.
On Monday, the stock markets opened strong on the news of BJP’s strong show in four key states, and saw it as a pre-cursor to the upcoming general elections. The stock markets hit an all-time high, with Sensex touching 21,483 and Nifty touching 6,415.25. However, the markets could not sustain this and would go down from here in the next few days, despite the positive news. 
Tuesday saw positive US economic data which boosted the case for tapering. Indian stock market participants booked profits amidst fears that the tapering would hit markets. This was further underscored by Fed Bank of St. Louis President James Bullard in a speech. This spooked the markets and throughout the day, the markets trended down. 
Markets closed down on Wednesday, for the second consecutive day, amidst news of Fitch and S&P warning that Indian government must do something to revive the economy or risk downgrade. Tapering fears continued to hang over the markets. Finance minister, P Chidambaram, sought to assure the markets of the government’s resolve to keep fiscal deficit to in check. 
Thursday saw continued pessimism, with the bears in control, with markets closing down for the third consecutive day. The RBI said that the liquidity conditions are expected to tighten in the immediate future on account of advance tax payments commencing from mid-December 2013. With less cash to spare, investment demand is expected to be subdued in the third quarter. 
On Friday, stock markets reacted to grim inflation figures and manufacturing data, and extend losses for the fourth consecutive day to end the week even lower. Stock market participants are now anticipating a rate hike from Reserve Bank of India (RBI) governor, Raghuram Rajan, who has kept inflation control as the centerpiece of his interest rate agenda.
Among the other indices on the NSE, the top two indices were IT (1%) and FMCG (1%) while the while the top two losers were PSE (5%) and PSU Bank (5%).
Among the Nifty stocks, the top five gainers were Sesa Sterlite (5%); Wipro (5%); H C L Technologies (5%); Infosys (1%) and Lupin (1%) , while the top five losers were Bharat Heavy Electricals (10%); Jindal Steel & Power (8%); I D F C (8%); N T P C (8%) and Jaiprakash Associates (8%).
Out of 1255 companies on the NSE, 320 companies closed positive, 905 closed in the negative while 30 closed flat.
Top ML sectors   Worst ML sectors  
Software & IT Services 1% Energy -5%
Hotels 1% Con_epc_infra -5%
Auto Components 0% Textiles -4%
Non-ferrous Metals 0% Telecom Services -4%
Chemicals 0% Oil & Gas -4%



Torrent Pharma acquires Elder’s Indian branded formulation business for Rs2,004 crore
Torrent strengthened its position in Indian market by acquiring Elder’s Pharmaceutical women healthcare and pain management business
Torrent Pharmaceuticals Ltd (Torrent) have entered into a definitive binding agreement with Elder Pharmaceuticals Ltd (Elder) to acquire Elder’s branded formulation business in India and Nepal for Rs2,004 crore. 
“This pathbreaking domestic consolidation by Torrent addresses our recent challenges and will significantly help Elder leverage its balance sheet.” Said, Elder chief executive officer and managing director, Alok Saxena "The transaction is a strategic fit for Torrent and will strengthen its core prescription-based business. This acquisition strengthens our position in the women healthcare, pain management & vitamins, nutrition segments by enhancing and accelerating market access. It is also expected to enable cost & revenue synergies in Torrent's domestic formulations business," said Torrent Group chairman Sudhir Mehta.
Elder's existing brand equity in the areas of women healthcare and pain management will help Torrent strengthen its position in the Indian market expanding into these fast growing areas, said Torrent in their filing with stock exchanges.
Torrent would fund the acquisition through a mix of internal accruals and bank borrowings. Under the proposed transaction, Elder will continue to manufacture & supply the products at its existing manufacturing facilities for Torrent for a period of three years.  Torrent said, the transaction has been approved by the boards of both the companies and is subject to approval by shareholders and other necessary regulatory nods. The deal is expected to close in the first half of 2014.
On Friday, Share prices of Torrent Pharmaceuticals Ltd closed 4.04% down at Rs479.50 on BSE. Elder Pharmaceuticals share prices closed 8.17% down at Rs298.30 on BSE, While benchmark S&P BSE Sensex closed 210 points down at 20,715.


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