Filing income tax returns (ITR) can be a dreary method for most people, particularly those who have a huge number of investments. Several documents are included in the process and individuals often end up doing mistakes that can affect the process further.
Besides, there are instances where people voluntarily pass on wrong information to the income tax department to maintain an increased refund. Such people are most likely to end up with a tax notice or a fine as the income tax department has performed stricter rules to check tax evasion.
Some common points to avoid while filing Income Tax Returns
- Avoiding to file income tax returns
There is a mistake that if your company has deducted tax, or if your gross income is under the exemption limit and if additional income (like shares or dividends, long term capital gains from the purchase of shares) is excluded from tax, then there is no requirement to file the IT return.
- Not checking/verifying Form 16 and Form 26AS
When you get Form 16 from your company or employer, always check all calculations. You can cross-check aspects of tax deducted with your Form 26AS to assure there is no confusion or mismatch. Furthermore, if you have many sources of income, guarantee that aspects of payments and TDS have been calculated accurately to avoid any mistakes when filing the return.
- Using the incorrect ITR form and Wrong or incomplete personal data
One of the most common errors – if you have losses/profits from capital gains, or if you were freelancing for part of the year etc, you should file returns applying a different form than the one you’ve been used to filling in. Another cause for confusion at times is the change in form numbers offered by the IT Department. Choose the exact form to avoid the denial of your IT return.
Make sure that you fill in your address, name, PAN, the email id or mobile number and bank particulars and details correctly. A wrong PAN will throw up a data mismatch, an incorrect email id suggests you won’t get any confirmation or other communication from the IT Dept, and inaccurate bank details can create a problem if a payment is due to you.
- Features of all non-dormant bank accounts
Earlier, taxpayers were only expected to specify the features of the bank account in which they wanted to receive the refund. Then, details of all non-dormant bank statements have to be notified.
- Not disclosing all returns – whether exempt or non-exempt
All returns and incomes must be disclosed – despite whether it is exempt or non-exempt from income tax. One of the most frequent errors is, not revealing interest income on fixed collaterals or recurring deposits – even if subjected to TDS (Tax Deducted at Source), the income and similar TDS as per Form 26AS still have to be considered in the ITR.
Another common mistake is not revealing interest on savings bank accounts, or maintaining a deduction under Section 80TTA for interest income up to Rs 10,000 but not revealing the original interest income itself.
- Wrong or Non-disclosure of Long Term and Short Term Capital Gains or Loss
Although there is a difference in tax rules for long term capital gains tax on supplies and investment funds. But, if there was an exchange of shares/assets/property etc, it has to be recorded in the income tax return online as per the exact rate and holding indexation cost in mind. Short-term capital gains should be given along with any short-term capital loss, with carry-forward as appropriate. Sale of house/property/land should be added along with the features of any applicable exclusions claimed. The ITR service also incorporates an additional sheet where you can input business or transactional details for the sale of shares of each stock so it auto-calculates and populates the long term capital gains applicable.
- Returns and TDS from the previous employer not mentioned
When you change jobs during the particular financial year, you must share previous payroll or salary and TDS features with your new company to avoid any mismatch or repeated deduction (you may receive a refund later, but that’s with the point).
If you have resigned from the first job at the beginning of the financial year, it is likely the first company deducted less tax. Ensure you record this income to the next company – if not made, mention it while registering your return.
- Not checking ITR-V in time
Registering your income tax return is not finished unless it has been checked and verified. Once you register and file your return, you have 120 days to check ITR-V – you can either do this online or offline, by posting a signed hard copy to CPC, Bangalore.