Tax computing can be slightly complex, given several rules and exemptions; however, if understood well, the process is quite simple. One such issue that many tax-payers face while e-filing of taxes is, a notice from the Income Tax Department that says, ‘Tax Due’, even when TDS has been deducted already. Salaried employees might be surprised to see an impending tax liability typically because the organisation/employer has been deducting a definitive tax fraction monthly from the salary figure.

Some common reasons for getting tax due while e-filing are as below:

  1. The current employer is not aware of your income from other sources - such as temporary projects outside the organisation, income from the fixed deposit, interest, etc. – and is making tax deductions based on the income you are currently receiving from the company. As per this condition, you would be liable to pay additional tax on your income.

    In many cases, when all sources of income are not disclosed, the tax slab of the payer is lower. However, when all incomes are accounted for, it raises the tax slab, thus, making tax due at the end of the payer. 

    Example: You are working for Google and earn about ₹10, 00, 000 lakh annually, by which means you fall in the 20% tax bracket. However, you received ₹90, 000 from interest on Fixed Deposit which implies you need to pay taxes per 30% of the slab. The difference in both computations (TDS at 20% and TDS at 30%) is the tax pending.

  2. In some cases, when an employee switches from one job to another, they might not disclose the income from a previous organisation or tend to not provide required investment proofs, which would signify that the tax deducted in inaccurate.

    Example: You worked in XYZ Company for 10 months and earned ₹4,50,000; then you switched to work with ABC and earned ₹3,50,000 by the end of the financial year. However, you did not disclose your earnings from XYZ to ABC, and hence, ABC calculated TDS at 5% + 4% cess, after providing basic exemption of ₹2,50,000 and deductions under 80C. But this would be completely wrong since you have already received the overall tax exemptions in the XYZ and hence, the new computation would be wrong. Moreover, your overall tax bracket would be higher.

  3. Another reason could be incorrect computation of taxes because of certain mistakes such as missed deductions or TDS not reflecting as per the Form 26AS.
To resolve this complication, you simply can pay the additional amount online on the official website of the Income Tax Department. Once through, make an entry in the ‘Self-Assessment Tax’ head. That said, it is overall advisable to not keep the taxes bundled at the very end, instead pay them in time to avoid hassles and also any levied interest on late tax payments.

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DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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