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Tuesday, April 4, 2017

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5 biggest myths about Tax in India

Indian has lots of myths about the tax deduction and filling, today in this article we are going to break some of the myths you might have.

5 biggest myths about Tax in India
Indian has lots of myths about the tax deduction and filling, today in this article we are going to break some of the myths you might have.

There is so much which a businessman needs to explain to the investors

A businessman may have five minutes to present to an investor, so it is advisable if he gets rid of the 75-page presentation.

The businessman is required to keep the following key questions in his mind:

  • Did he clearly spell out the investment which he wanted from them and the return which they would get from him?
  • Did he get the questions during or after his presentation? Could he answer them all and if not, did he go back after and provided the answers?
  • If the investors said no, did he ask if the deal could be good for anyone else they knew? The world of investors is a tight-knit one, and it is usually the fact that one group knows what another group looks for in a deal.
  • Did he take the time to thank the investors for their time?
  • Did he take the time to really capture their feedback, and did he follow up?

The businessman must be sure to explain how his product or service is different than anything else out there, and how it creates demand with a market segment, and how the businessman can sell it for more than it costs to produce. For example, the law requires you to obtain a license like a food license, import export code. You can easily show that a market for your product exists.

There’s no money out there!

Between angel investors, venture capitalists (VCs), traditional borrowing sources (such as banks), government and university grants, and non-traditional funding sources (like crowdfunding), there are billions of dollars that are available to fund ideas, startups, NGOs, emerging brands and even successful companies that are looking to grow.

The real issue which is related to this myth is not that there is not funding, but rather the myth is that people do not know where they must look for the funding.

The Local and state governments, as well as many academic institutions, have resources such as programs supporting entrepreneurship which are available to apply for.


If my tax has already been deducted it cannot be recovered later on.

If the tax deducted at source is more than the actual tax liability, then you can claim the refund for the TDS by filing your income tax return. Even in case your tax liability is lower than the tax actually deducted you can claim the refund for the excess tax deducted from your income.

I don't need to disclose my previous salary amount to my current employer.

This is a common problem wherein most employees avoid mentioning any details about their previous employer to their present employer. Because of this, the new employers have no details about the previous salary, making them deduct tax at source as if the employee has no other source of income. That is incorrect. The employee must realize that the tax must be paid on the total amount of salary received in the previous year. When the two salaries are added together, it usually results in the employee entering into a higher tax bracket.

The process of e-filing one's income tax return is not mandatory.


Filing returns have been made mandatory for any taxpayer having a total income of Rs 5,00,000 or more. Total income is arrived at after deducting all the relevant deductions under chapter via one's gross total income. A taxpayer earning less than Rs 5,00,000 can also e-file their income tax returns or use the option of filing returns manually, however the same is not recommend.

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