Jul 132018

Point to be consider by salaried class before filing ITR

1) Non reporting of interest income from savings/ fixed deposits account: These amounts can be directly mapped form the individual’s bank account statements and Form 26AS. “Non-reporting / under reporting of these amounts are apparent cases of tax evasion and calls for further investigation. Further, at times taxes are also deducted on interest income and hence, the mismatch of income by non-reporting are easily identified.


Interest on saving account will be added in income from other sources on receipt basis (i.e. when your bank account is actually credited with interest amount) and corresponding claim of deduction may be made in Part C of the form under section 80TTA in case return in filed before 31st July.

Section 80TTA: Deduction in respect of interest on deposits in a savings account not exceeding Rs. 10,000/-

Interest on fixed deposits is to be taxed under the head income from other sources. These incomes can be offer for tax on accrual basis (i.e., it is earned) or earned basis (i.e. bank account is credited with the interest income). Take a FD interest certificate / FD statement from bank and calculate tax implication under both cases and decide whether offer it on accrual basis or on receipt basis.

2) Undocumented / fraudulent HRA claims: One of the common fraudulent practice by employees are to claim fake HRA bills without adequate supportings, like lease agreement, etc. Further there are no adequate outflows from their bank account to the extent of rent payments claimed. There may be some practical situations where employees are having rented accommodation but adequate supporting are not available as landlord is not supportive. A more practical approach should be made before claiming HRA.


First, make judgement whether it is always beneficial to take HRA claim or take rental charges deduction under section 80GG or rent free accommodation from your employer. Thereafter, as far as possible always keep a copy of rental agreement and rent receipts in your income tax file to sustain your claim rental payments. Further, direct bank transfer (BT) from you salary account of rental expenses is more beneficial. However, in case landlord is not supportive you should withdraw your rental expenses from your bank account every month and pay the same to landlord so as to have a trail of cash flows from your bank account.

3) Claiming false 80C deductions: It is very easy for employees to claim false 80C deductions like LIC bills, Mediclaim deductions etc. inflating the value of eligible fixed deposits without actual outflow of such investments

4) Not considering income derived from all employers: People changing the job should ensure that they consider the income derived from all the employers while filing their tax return. The Tax Department already have this information based on TDS return filed by the employer and missing to report any such income can trigger inquiry against them.

5) Claiming false deduction under chapter VI-A: There are a few tax professionals who try to lure the taxpayers by promising high refund and charge them 10-25% of their refund amount. These professionals indulge in inflating or making wrong claims under various sections of Chapter VI-A like, Tax Saving Investment u/s 80C, Education loan interest – u/s 80E, Deduction form Mediclaim policies – u/s 80D, Rajiv Gandhi Equity Saving Scheme – u/s 80CCG, Donations – u/s 80G, 80GGA, 80GGC or other deductions relating to disability or medical treatment of certain illness – u/s 80DD, 80DDB, 80U.

6) With linkage of Aadhaar and PAN to all your bank account, loan account, and demat account, the I-T Department may be able to digitally verify many of your claims with the data available with them. In case of any discrepancy it can start investigation against the tax payer.

7) Making false claims under Section 10: Many salaried tax payers while filing their tax return indulge in making false claims under section 10, viz. HRA, LTA, medical reimbursement, etc. Since last year the Tax Department has started comparing the data in the tax return with the income as reported in Form 16, Form 16A, Form 26AS.


It may be noted here that in case there is genuine difference in what you should be allowed and what is actually allowed by the employer you should prepare a reconciliation statement and same may be produced to the department online when it is asked for.

8) Inflating claim of home loan interest: Since every your bank account is linked to PAN card and aadhaar card and hence it is now not possible to hide actual interest payment from the department

9) Making false claims on capital gains: In the past a few taxpayers in a bid to save tax on their capital gains made false claims u/s 54, 54F, 54EC, etc. New the ITR Form requires to submit the details of the investment made under these sections. Further with the linkage of Aadhaar and PAN with property transactions and the financial account, it would be easy for the tax department to verify your claims electronically.