Filing the annual income tax return is a statutory obligation. Filing it “properly” must be considered as a duty that must be performed. Just because there are so many examples of non-compliance you can refer to does not mean you can be non-compliant too. The fact is that they have not been caught as yet.

Filing returns is often considered “a pain” especially for most salaried employees. The general feeling is ‘why should I do this when my company is anyways deducting my tax and paying it to the government?’ ‘Why take on this additional hassle?’ This would be true if you lived in some sort of financial isolation. Such isolation means the day your salary comes into your bank account, the very same day you make full cash withdrawal. In other words you never have any money in bank, you never make any investments, you do not do any tax savings, have no insurance and you basically live for the day. But most of us do not behave like this. Even if we were absolutely lazy to make any investment or insurance, merely by virtue of having money in our bank account there is possibility that most of us have been non-compliant and have exposed ourselves to civil and criminal liability. This definitely happens if we choose the Rs 300 option.

The Rs 300 Option

Most people tend to be rather happy that a man comes by the desk, picks up your Form 16 and files your return. All for Rs 300. You feel you have done your duty and as such this irritant of filing returns is off your back for the next 12 months. By filing in this manner you have possibly committed a handful of civil and criminal offences.

1. Bank interest that you got has been ignored. Even if your bank has deducted TDS, it is about 10 per cent and if you fall in the higher tax bracket you have committed another offence; that of non-payment of taxes. You have not declared this income, you probably did not know that this was to be considered as income or you did not know it existed and thus you did not offer it for payment of taxes. Either ways ignorance of law does not mean relief from law.

2. Your mutual fund or shares or pieces of metal you have may have earned capital gains in the last year. Did the 300 rupee person take that into account? Again this is concealment and wilful tax evasion.

3. Unexplained investment – If this was not reported earlier or it comes to your notice after a few years or you have either forgotten details of such transaction, your assessing officer has the power to add the entire sum to your income for the current year and you are liable for tax and perhaps penalty as well.

4. Unexplained money – Don’t remember who gave money to you that you deposited via cheque in your account or worse that you deposited cash but have forgotten the details of that transaction. Well the entire sum can be added to your income and similar treatment meted.

5. If you have house property on rent or more than one property, then filing your return with the Rs 300 option would be a grave error.

Should you be worried? Enforcement agencies are too busy with other and larger matters than to be bothered about what you are doing. But that does not mean that you are free to not comply. You have not been caught, you have not received any notice as yet, but it may well just come by one day.

Filing PROPERLY

Filing properly and having a personal balance sheet ensures you have all the control and all the answers always. No one can ever point a finger at you. Is that not good enough already? You have trail and details of all transactions and per se you cannot be prosecuted. You can still be questioned but there can be no action against you ever. Not to mention the other far reaching benefits that will accrue to you if the returns have been filed properly in matters such as divorce, in receiving loans, facilities, guarantees, credit etc.

If you are still waiting to find the right (cheaper) person or you are one of those

“I am too busy for all this”, “I am salaried, hence nothing to worry” etc, I suggest you reconsider your disposition. Hire a professional. Professionals will charge you in the range of Rs 2,000 to Rs 3,000 for filing your return and preparing your personal balance sheet in larger cities. Personal Profit and Loss is also necessary for self employed persons. So if you earn Rs 3 lakh p.a, is Rs 3,000 too much to pay for security, safety and professional help?

The question you may ask is how is it that no one still seems to be bothered or that no one has ever suffered because of any non-compliance? I do not know the exact answer here but I sure know that the relevant laws exist, the punishment exists, the enforcement agencies exist – just that things are not enforced as of now. It is better to comply to the best of your ability.