Awaiting your refund for the last year? Don’t make the same mistake again

Salary cheque for February looks like it has been on a crash diet. Could not submit the documents of your  investments on time, company deducted excess TDS?

Worse, couldn’t get any exemption for your house rent allowance? “Because the landlord was not willing to give his PAN number in the receipt. You were too late to convince him, which delayed the whole process,”  

“Due to some unforeseen expenses, could not invest Rs 30,000 by the deadline set by my employer,”  Are you facing a similar problem? you were not able to submit your investment proof on time, you can do so before the salary and deductions are computed for March. Your company will adjust the excess TDS and you may be spared further tax deduction in the last month of the financial year.

Even if you have not exhausted your tax-saving limit under Section 80C till now, you can still do so. If you submit the proof before the next salary cycle, any excess TDS deducted from your salary will be adjusted in the salary for March.

Getting a refund

Even though you will be able to get the tax adjusted and avoid another hefty TDS in the March salary, many of you may have already paid excess tax. The only way you can get it back is by filing your tax returns. The sooner one files the return, the earlier he gets his refund. Now that the CBDT has made it mandatory for taxpayers to quote their bank account number and the bank’s IFSC code in the tax form, refunds are much quicker. If you are lucky, you get the refund in two to three months, but be prepared to wait for a longer period.

If the tax refund gets delayed due to any reason, the taxpayer is entitled to a 6% interest on the amount. The interest will start accruing from the first month of the assessment year (April 2014 in this case). However, no interest is payable if the refund amount is less than 10% of the tax payable during the year.

Stay alert

Many of these problems can be avoided by making tax planning an integral part of your investment schedule. Instead of leaving it for the last minute, you should start your tax planning from the very first month of the new financial year. Remember that the interest the government pays on delayed refund is just half of what it charges you for delayed tax payments.

There is a 1% late fee charged for every month of delay in paying your tax dues. The smart taxpayer manages his finances in a way that the TDS is just equal to the tax he is supposed to pay for the year. To do that, you should also be aware of all the deductions you are eligible for and should inform your employer well in advance.

Courtesy for this article – Economic Times.

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