Income Tax Return (ITR) filing is one of the most important responsibilities for anyone who has an income. The first and foremost duty is to file the ITR in time. While filing ITR, there are some common mistakes that you must avoid at all costs.
Here are some of the mistakes that can result in getting an income tax notice.
Choosing the wrong ITR form
Every year the income tax department releases revised ITR forms that have different eligibility criteria. Each ITR form is based upon different sources of income to be reported. Since the forms are revised every year, it may so happen that taxpayers no longer have to file the same ITR they filed the previous year. They may also have to disclose additional details due to introduction of new fields which are added every year.
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 attract a penalty, but also robs you of certain benefits. For instance, losses from capital gains or business or profession cannot be set off in subsequent years in case of late filing.
Not e-verifying the ITR filed
Once your ITR is filed, you are required to e-verify the same either through Aadhaar-based OTP or through netbanking or demat account or manually dispatch a signed copy of the ITR acknowledgment receipt (ITR-V) to CPC Bangalore. If you fail to e-verify the ITR within 120 days, it will be invalidated.
Failing to report all sources of income
This is a mistake many salaried individuals make as they may also be earning some interest on fixed deposits or may have capital gains on debt/equity instruments. It is important that income under all heads of income be reported correctly. As all the records are now integrated online, any mismatch in reporting of an income may put taxpayers under the scrutiny.
Mismatch in income and tax deduction
Form 26AS is a consolidated tax credit statement that reflects TDS deducted against your PAN from different sources of income. The same can be downloaded from your e-filing account on the I-T website. Before filing return, it is important to reconcile your income with that reflected in Form 26AS and Form 16/16A. In case of any discrepancy, inform the deductor to correct it from his end.
Forgetting previous job’s income
When your change your job, the new employer may not consider your previous income while calculating tax and you can get tax exemption all over again on the new income. This actually results in almost no taxes as compared to what is payable.
Not claiming applicable tax deductions
Sometimes, due to ignorance people miss out on opportunities for claiming income tax deductions. You may not have submitted tax saving investment proofs to the employer and hence the details were not recorded in your Form 16. However, even if investments were not declared to the employer, tax relief can still be claimed while filing income tax returns. Keep the details of investments as supporting documents so that these deductions can be claimed.
