Income Tax Return Warning: Top 5 mistakes one should avoid during ITR filing process
Income Tax Return Warning: First and foremost, the basics! The most important thing that an earning individual should keep in mind is to file ITR on time.
Income Tax Return Warning: Filing ITR is one of the important responsibilities of an earning individual. At a time, when everything is becoming online, people are advised to fill up their ITR on their own provided they have some idea about the selection of ITR form, extent to which one can disclose one's source of income, TDS etc. Generally, to guide an individual to file ITR on their own, there are some common mistakes that they are advised to avoid.
Speaking on the common mistakes that an earning individual commits while filing its ITR Harsh Jain - Co-founder & COO, Groww said, "First and foremost thing that an earning individual should keep in mind is to file ITR on time. Apart from that selection of ITR form, not disclosing the source of income, mismatch in Form 26AS and other TDS certificates etc., are some common mistakes that people commit while filing an ITR."
See Zee Business video below:
Jain listed out the following five mistakes that one should avoid while filing an ITR, either online or offline:
1] Selecting the wrong ITR Form
This is something every taxpayer needs to take heed of especially if you are filing your ITR on your own. Every year the income tax department releases revised ITR forms that specify the eligibility criteria. Each ITR form differs based on the nature of income that needs to be disclosed by the assessee. Since the forms are revised every year, it may so happen that you may no longer have to file the same ITR you filed last year based on the changes. You may also have to disclose additional details as new fields may be added to the revised forms. Please be very careful while assessing your eligibility and file the correct ITR based on the nature of your income. The use of incorrect ITR may lead to an intimation from the Income Tax department [ sec 139 (9)] asking you to revise your return within 15 days. Failure to do so will lead to your Income-tax return being considered as invalid or “ not filed” and other penalties may follow.
2] Not Disclosing All Sources Of Income
This is a mistake many salaried individuals make. You need to disclose all sources of income apart from your salary while filing your return. The sources other than your salary include income from bank savings, rental income from house property if any, capital gains income, etc. It is advisable to report tax-exempt income such as dividends, gifts received, interest on tax-free bonds, etc. You must also disclose income from foreign assets as well. Basically, any income on which TDS has been deducted needs to be disclosed. Do not hide any information as all records are now integrated online and any mismatch in your income reporting may put you under the scrutiny of the Income Tax Department.
3] Mismatch in Form 26AS Details and Other TDS certificates
A very important point that taxpayers often overlook, which leads to reconciliation issues later on. It is advisable to keep all your TDS certificates like Form 16, Interest certificates from the bank (Form 16 A), TDS certificate on sale of property ( Form 16 B) together and check whether correct TDS has been deducted against your PAN, with the entries in your Form 26AS. Form 26AS is a consolidated tax statement that reflects TDS deducted against your PAN from all sources. Make sure there is no mismatch in the values, in case there are, you must inform the deductor immediately to correct it from his or her end. Any discrepancy in this regard will prevent you from claiming a tax credit against TDS later on.
4] Not Claiming deductions correctly
It is possible that you may have not been able to submit tax saving investment proofs to your employer and hence the details were not recorded in your Form 16. However, even if you did not declare your investments to your employer, you can still claim a tax relief while filing your income tax returns. Keep the details of your investments with you as supporting documents so that you can claim these deductions. Also, in case you have multiple form 16s , make sure you also disclose salary details of all employers you changed within a financial year.
5] Not filing Tax Returns on Time
This is the biggest mistake that taxpayers should avoid. Tax filing should not be a last-minute thing and the necessary documents and TDS forms should be collected well in advance. Not only does late filing attracts penalty, but also robs you off certain benefits. For instance, losses from capital gains or business or profession cannot be set off in subsequent years in case of late filing. (Loss on the property, however, can be set off as an exception).
Apart from avoiding these mistakes also keep a few extra pointers in mind:
a) Link PAN with Bank Accounts: It is important so that in case there is a refund, it gets credited to your bank account. You are required to validate your bank account details on the income tax website now ( effective March 1, 2019).
b) Be Mindful of Forms to be filed before tax filing: As the case maybe there are certain forms that you may need to file before filing your returns if you want to claim certain exemptions. For instance, you need to file Form 10E if you have received salary arrears in the financial year and need relief for the increased tax liability under section 89 (1). Another example would be, filing Form 67 if you want to claim foreign tax relief. If you want to claim these exemptions, you need to file these forms before filing your returns. Failure to do so would result in you in not being able to claim the relief as well as receiving a tax notice from the income tax department.
Therefore, it is advisable for all those people going to file their ITR to keep all documents handy, read and understand the correct ITR eligibility, complete the entire return filing process including e-verification and double-check the personal details you enter while filing your income tax returns.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.