HENCY R SHAH AND ASSOCIATES

𝗥𝗲𝗳𝘂𝗻𝗱 𝗠𝘆𝘁𝗵 𝘃𝘀 𝗥𝗲𝗮𝗹𝗶𝘁𝘆: 𝗙𝗶𝗹𝗶𝗻𝗴 𝗗𝗿𝗶𝘃𝗲𝘀 𝗥𝗲𝗳𝘂𝗻𝗱𝘀 𝘔𝘺𝘵𝘩: 𝙍𝙚𝙛𝙪𝙣𝙙𝙨 𝙘𝙤𝙢𝙚 𝙖𝙪𝙩𝙤𝙢𝙖𝙩𝙞𝙘𝙖𝙡𝙡𝙮. 𝘙𝘦𝘢𝘭𝘪𝘵𝘺: 𝘼 𝙫𝙖𝙡𝙞𝙙 𝙧𝙚𝙛𝙪𝙣𝙙 𝙛𝙤𝙡𝙡𝙤𝙬𝙨 𝙖 𝙘𝙤𝙧𝙧𝙚𝙘𝙩𝙡𝙮 𝙛𝙞𝙡𝙚𝙙 𝙧𝙚𝙩𝙪𝙧𝙣. Income Tax data shows a large share of pending refunds relate to returns not filed, filed late, or filed with errors in TDS and income reporting. The system processes refunds after verification of Form 26AS, AIS, and return data. 𝘒𝘦𝘺 𝘵𝘳𝘪𝘨𝘨𝘦𝘳𝘴 𝘧𝘰𝘳 𝘳𝘦𝘧𝘶𝘯𝘥 𝘥𝘦𝘭𝘢𝘺 𝘰𝘳 𝘥𝘦𝘯𝘪𝘢𝘭: • Return not filed within due date • Mismatch between Form 16, 26AS, and AIS • Incorrect bank details or pre-validation failure • Wrong selection of ITR form • Unverified return after filing 𝗘𝘅𝗮𝗺𝗽𝗹𝗲: Income ₹6,50,000, TDS deducted ₹75,000. Eligible tax liability ₹62,400. Refund ₹12,600 arises only after correct filing and verification. 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗮𝗹 𝘀𝘁𝗲𝗽𝘀: • Reconcile Form 16 with AIS and 26AS before filing • Select correct ...

𝗧𝗵𝗲 𝗠𝗼𝘀𝘁 𝗖𝗼𝗺𝗺𝗼𝗻 𝗠𝗶𝘀𝘁𝗮𝗸𝗲 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗠𝗮𝗸𝗲 𝗔𝗳𝘁𝗲𝗿 𝗘𝗮𝗿𝗻𝗶𝗻𝗴 𝗣𝗿𝗼𝗳𝗶𝘁𝘀 Last week, a client walked into my office with a smile. “Madam, this year I earned well from the stock market.” I nodded. “Great. How much tax have you planned for it?” Silence. He paused… then said, “I thought profit is profit… tax toh return mein dekh lenge.” That’s the problem. People are actively investing, trading, building wealth, but when it comes to taxation, there’s complete confusion. So I explained it to him in the simplest way possible: How your stock market income is actually taxed (FY 2025-26) 𝘓𝘰𝘯𝘨 𝘛𝘦𝘳𝘮 (𝘏𝘰𝘭𝘥𝘪𝘯𝘨 > 12 𝘮𝘰𝘯𝘵𝘩𝘴) 𝗚𝗮𝗶𝗻: 12.5% tax after ₹1.25 lakh exemption 𝗟𝗼𝘀𝘀: Can be set off against LTCG, carry forward 8 years 𝘚𝘩𝘰𝘳𝘵 𝘛𝘦𝘳𝘮 (𝘏𝘰𝘭𝘥𝘪𝘯𝘨 < 12 𝘮𝘰𝘯𝘵𝘩𝘴) 𝗚𝗮𝗶𝗻: 20% flat tax (no slab benefit) 𝗟𝗼𝘀𝘀: Set off against STCG/LTCG, carry forward 8 years 𝘐𝘯𝘵𝘳𝘢𝘥𝘢𝘺 𝘛𝘳𝘢𝘥𝘪𝘯𝘨 𝗚𝗮𝗶𝗻: Treated as...

Myth: Only Form 16 is mandatory to file a return. vs Reality: Salary slips, AIS, and bank records can also help. Form 16 Is Not the Full Picture Last week, a salaried client shared Form 16 and expected the return to be filed in minutes. During review, the team requested salary slips, AIS, Form 26AS, and bank statements. The response was immediate. Form 16 already given. Why ask for more? The detailed check told a different story. Salary slips showed HRA, LTA, and reimbursements with tax treatment different from the final payroll summary. AIS reflected savings interest, fixed deposit interest, and dividend income not appearing in Form 16. Form 26AS showed TDS entries from banks which were not considered. Bank statements confirmed interest credits and a few high value transactions. One small capital gain entry was visible in AIS from mutual fund redemption. Form 16 is issued by the employer. It covers salary paid and TDS deducted by that employer. It does not include income from banks, i...

HRA EXEMPTION: MYTH VS REALITY Rohit reviewed Form 16 and felt relieved. HRA received during the year looked fully exempt. Rent receipts were in place. Case closed. During tax review, numbers told a different story. Exemption was not equal to HRA received. Law applied three tests. What matters under Income Tax Act 2025 and Rules 2026: Actual HRA received from employer Rent paid minus 10 percent of salary 50 percent of salary for metro cities or 40 percent for non metro The lowest value decided the exemption. Salary for this purpose includes basic plus DA where terms of employment include DA. Rohit paid moderate rent in a non metro city. Result: a portion of HRA became taxable. Common gaps seen in practice: Salary definition ignored while computing limits City classification missed Rent paid to relatives without proper documentation No rent agreement or inconsistent payment trail Claim made despite living in own house Quick checklist before filing return: Confirm city category based on ...

Zero Tax Does Not Mean Zero Compliance Myth: Zero tax means zero compliance. Reality: Compliance obligations continue even when tax payable is nil. Many taxpayers assume no liability removes reporting duties. Law does not support this view. Key situations where compliance still applies: Return filing: Income below taxable limit still requires filing in cases like foreign assets, high-value transactions, or loss carry forward. Example: Capital loss of Rs. 2 lakh needs return filing to carry forward. TDS and TCS: Deduction and collection provisions apply based on transaction nature, not final tax liability. Example: Payment to contractor above threshold triggers TDS under section 194C. Audit requirements: Turnover thresholds decide audit applicability. Profit or tax liability does not override this. Example: Business turnover above prescribed limit requires audit under section 44AB. Compliance reporting: Forms like Form 15CA, 15CB, or specified disclosures still apply. Example: Forei...

𝗠𝗬𝗧𝗛: Income below basic limit means no filing vs 𝗥𝗘𝗔𝗟𝗜𝗧𝗬: Filing may still be mandatory Many taxpayers skip filing when total income stays below the basic exemption limit. Law does not always permit this. Filing is required in specific cases, even with low income:   • Deposit in savings bank accounts exceeds ₹50 lakh in a year   • Foreign travel expense exceeds ₹2 lakh   • Electricity bill exceeds ₹1 lakh   • TDS or TCS exceeds ₹25,000, ₹50,000 for senior citizens   • Business turnover exceeds ₹60 lakh or professional receipts exceed ₹10 lakh   • Claim of refund due to TDS deduction 𝗘𝘅𝗮𝗺𝗽𝗹𝗲: Total income: ₹2,30,000 TDS deducted by bank on FD interest: ₹18,000 Tax payable after rebate: ₹0 Refund due: ₹18,000 Without filing, refund remains unclaimed. Funds stay with the government. 𝗡𝗼𝘄 𝗰𝗼𝗻𝘀𝗶𝗱𝗲𝗿 𝗮 𝘁𝗮𝘅 𝗽𝗮𝘆𝗮𝗯𝗹𝗲 𝗰𝗮𝘀𝗲: Total income: ₹2,80,000 Tax after rebate limit crossed due to special rate income or conditions Tax pa...