The Real Cost Of Filing Tax Returns For Free

(As Published in Economic Times on July 11, 2016)
If we have the choice of paying for a service or getting it for free, most of us will choose the second option. After all, why shell out money for something that can be done at no cost? This is why a majority of taxpayers opt for filing their tax returns for free. However, taxpayers who opt for the free option may be paying a heavy price. Our data shows that 68% of such taxpayers pay more tax than their peers. They could save thousands of rupees if they took help from a tax expert and optimised their tax planning.
The Income Tax Department offers free filing for the simple reason that the government wants to encourage more and more people to file their returns. One can simply log on to the official portal and file his return for free. The only glitch is that the portal will not guide you on how to optimise your tax. If you miss a certain deduction or exemption, the portal will not point out the error nor suggest a solution. Tax collections have missed the target and the government wants to increase its revenues. It will happily keep the extra tax paid by taxpayers who are not conversant with the rules. Most salaried taxpayers and small businessman end up paying more tax than due.
Many private portals also offer free filing facilities as well as investment advisory services. These portals hope that the commission on tax-saving investments by these free customers will help them make money some day. This can lead to a serious conflict of interest. High-commission products are palmed off to taxpayers, forcing them to make multi-year commitments. Investment advice should be in the interest of the individual, not the intermediary.
A few years ago, an NRI client was pleasantly surprised to know that his tenant was depositing 10% of the rent as TDS on his behalf. The NRI was not claiming credit for the tax paid on his behalf because he had never checked his Form 26AS. One taxpayer who had changed jobs during the year had claimed tax benefits from both employers. Another client was not aware that the Rs 10,000 exemption for interest under Section 80TTA is only for savings bank interest and not fixed deposits.
A tax expert will analyse your income tax return and see if all the relevant exemptions and deductions have been availed of. He will also remove mistakes in the tax form, which means your income tax return will be error free. Many taxpayers miss out benefits because they are not aware of the rules.
Don’t wait anymore, start return filing for this year now!
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