Common Reasons for Getting Tax Due While E-Filing

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.

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.

People who receive paycheques are frequently taken aback when they see the tax due since the company withholds a specific amount as tax each month before crediting the wage. If freelancers were unable to estimate their tax liabilities in a timely manner or where TDS withholdings from customers were insufficient, then they might also notice a tax due in their return.When filing a return, a tax payable may appear for a numberof reasons. Four such scenarios are shown below where you might see a tax payable on your income tax return :1) Based on the deductions & income you disclose to your company, tax is reduced. You would have to pay additional tax on any fixed deposit or freelance project income that you did not disclose.2) On occasion, this income can cause you to fall into the 20% or 30% tax bracket. If your wage income for the year totals Rs. 4,80,000 and you earn Rs. 70,000 from a project you took on as a freelancer, then you would be subject to the 20% tax bracket and must pay tax.3) Fixed deposit interest is taxed in the same way as salary income. Banks only withhold 10% TDS when interest income surpasses Rs. 10,000. If you fall into the 20% or 30% tax bracket, then you will need to payextra tax on the fixed deposit .4) Another situation in which taxes are due is when employees switch positions without providing their previous employer with investment documentation. Additionally, the minimal exemption plus Section 80C deduction could be taken into account by the current employer, who might not have deducted taxes as much as they ought to have.5) You might have forgotten to include a deduction in your return, or your TDS might not be displayed as it should be in your Form 26AS. Ensure that the returns appropriately reflect all of your deductions. To ensure you have claimed responsibility for every TDS entry in your returns, download your 26AS form & verify it.6) It's possible that you made a mistake when submitting your income tax return. Check your entries again.

Using Challan 280, record your income tax return under the heading "Self-Assessment Tax" in the electronic filing portal after paying any overdue taxes online through the department's website.

Don't wait until the very last minute to pay taxes

It is advantageous to pay your taxes as soon as you can if you owe them on your income. If you haven't paid all of your dues, then you won't be able to file a return. Delays in tax payments also incur interest.

Interest on owing taxes

Anyone whose income taxes total more than Rs. 10,000 in a fiscal year must make quarterly payments rather than a single, sizable payment at the end of the year. Most of the time, the employer will use TDS to cover the needed tax payment for a salaried employee.But if 90% of the employee's taxes haven't been submitted by the end of March and the salaried person has a significant amount of "other income," then the employee will be required to pay advance taxes. Under Sections 234B & 234C, interest may be assessed in this situation.When you submit your income tax returns beyond the deadline, interest is additionally assessed under section 234A.Thus, if you find a tax payable while completing an income tax return, then don't panic and carefully review your return at each stage. Hopefully, this list may assist you in identifying the mistake.

Any error committed when submitting the returns has the potential to throw the whole thing off. Consider the enormous difficulties that taxpayers face while completing and filing their income tax forms.

1) Entering incorrect information:

When submitting your income tax returns, you must complete the ITR forms, which have numerous columns and rows. The necessary information must be entered using a certain format.
Incorrect entry of these details will almost definitely result in errors. For example, for the various dates, one must precisely adhere to the format requirements. If you submit the dates in a different format, then your returns will be regarded as inaccurate.

2) Incorrect income accounting:

Every taxpayer is required to calculate their income appropriately. These include the returns on your savings accounts, your fixed deposit interest, your capital gain income, and the rental income from your real estate. The appropriate fields should contain all of the incomes that have been reported.

3) Mismatch of crucial details:

Since TDS is taken from all incomes and not just salaries, the tax withheld at the source may not be accurate. If there is a discrepancy between the information supplied in the accessible ITR forms and that provided by the government, then the filled returns will be deemed invalid.Taxpayers should constantly examine their tax credit statements . They can use this to confirm the TDS being taken from multiple sources.

4) Whenever an employer refuses to offer HRA benefits:

If people don't turn in their rent receipts, then they risk losing their housing subsidy. The majority of taxpayers don't use their HRA benefits. It can be very difficult to determine the amount of HRA that applies.

5) Failing to account for certain deductions that can be claimed:

Every fiscal year, you have a fixed percentage of deductions available to you as a taxpayer. Along with your pay, you should list any other source of income you have. These deductions are computed based on certain investments and expenses. However, since the majority of taxpayers are not cognizant of all the expenditures that are allowable deductions, calculating the amount to be claimed can be exceedingly challenging.

6) Form 16S for people who have changed occupations are different:

When a taxpayer changes jobs, they will always have new forms of 16S. When submitting their tax returns, such taxpayers will have various forms from each employer.

By calculating the taxable wage and the tax due, income tax is determined on a monthly salary. The total taxable income for the year, including your salary, will be determined by your employer at the start of the fiscal year. On such taxable income, the employer will determine the applicable deductions and the net taxable income. The employer will then determine the tax due for the fiscal year.Your monthly wage will be subject to the annual tax rate divided by the number of months in the year. If you joined during the fiscal year, then your monthly surcharge will be calculated by dividing your tax liability by the number of months left in the year. Such a monthly tax will be taken out of the salary each month and deposited as tax withheld at the source with the government.

Depending on the amount of net tax that taxpayers must pay, the TDS is subtracted from salary income. You will get a refund of the TDS deducted sooner if the total amount of taxes paid exceeds the entire amount of taxes due at the time of ITR filing.Thus, to earn the TDS refund, make sure you manage your taxes, invest in investment instruments like ELSS , which provide tax benefits, and take all the necessary deductions. Additionally, keep in mind that in order to receive a tax refund, the income tax return must be submitted on time or earlier.Ready to make the most of your money? Start your tax planning journey now!

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.