New Delhi: Before proceeding further to file your tax return it really makes sense if you just sit down and prepare the check-list of some most important points of difference in this year's income tax return in comparison with the return which you had filed last year.
No standard deduction for the salaried
Please do remember that when you go now to file your income tax return for the financial year 2005-2006, no standard deduction would be granted to salaried employees.
Thus, this is an important point to be taken care of by all salaried employees so that they do not claim standard deduction while filing their Income-tax return for the year ending on 31st March, 2006.
Concept of tax rebate no longer applicable
Similarly, the tax payers should also remember that now the concept of tax rebate is not in force. Thus, the erstwhile tax rebate, which was available on investments, is gone from this year in view of straight deduction for investment etc.
Last year, taxpayers were entitled to claim rebate on the investments made by them in terms of section 88 of the Income Tax Act, 1961.
Similarly, the senior citizens as also women tax payers were also entitled to tax rebate in terms of section 88B and 88C of the Income Tax Act, 1961. All these sections are not in operation in respect of the financial year 2005-2006 for which you are going to file your income tax return.
Although the income tax return form contains a column relating to tax rebate but this column should be ignored by the tax payers specially in view of the fact that the concept of granting tax rebate on investments to senior citizens and to women tax payers is not in the statute book right now.
The sub limits for availing tax deduction in respect of certain investments or payments in terms of new section 80C is again very important while filing your Income-tax return.
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No sub limits for tax deductions
Please do remember that this year when you file your income tax return there will be no separate sub limits for granting you tax deduction in terms of section 80C on account of payments made by you for insurance, provident fund, public provident fund, repayment of the housing loan, children education fees, payments for ELSS (Equity Linked Savings Scheme) so on and so forth.
There used to be separate sub limits till last year for some of the above-mentioned items.
However, when you get ready to fill up your Income-tax return form for the assessment year 2006-07 please keep in mind this important fact that there are no sub limits within the overall limit of Rs 1 lakh for granting you tax deduction right from your income in respect of above-mentioned payments/expenditure.
Thus, the tax payer can claim deduction amounting to Rs 1 lakh as per section 80C of the Income Tax Act, 1961 even if the entire amount has been spent towards making repayment of housing loan etc. Similar would also be true if the entire sum of Rs 1 lakh has been made for contribution towards equity linked savings scheme.
Benefit of section 80L (interest exemption) no longer available
The deduction in terms of section 80L amounting to Rs 15,000/- on account of interest from bank, interest from bank fixed deposit, interest from National Savings Certificate (NSC) or National Savings Scheme (NSS) and interest from government securities is not available for the above-mentioned assessment year 2006-07.
Hence, the taxpayers in their tax returns must very carefully declare their interest income from the bank, NSC so and so forth and pay tax thereon.
Please do not claim deduction u/s 80L while filing your income-tax return because the provisions of the said section are not applicable for the assessment year 2006-07.
For one-by-six scheme, electricity bill is a parameter
Compulsorily filing of income tax return based on fulfillment of one or more of the economic indicator has been done away with.
Thus, while you are getting ready to file your income-tax return for the assessment year 2006-07 please do remember that if you are fulfilling any one or more of the conditions relating to economic indicators or you are making payment of electricity expenses in excess of Rs 50,000/- in a year but your taxable income is below the exemption limit then also you need not file your income tax return this year.
This is really a great big benefit and time saving scheme for all those lakhs of persons in the country who do not have taxable income but they were fulfilling any one of the economic indicator.
Thus, for the assessment year 2006-07, no compulsion to file income tax return merely if you fulfill 1/6 economic indicator.
However, such taxpayers if they want they can continue to file their income-tax return even if the income is below the exemption limit.
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