Avoid these 10 Common Mistakes in Filing I.T. Returns!
It is quite common to err while doing something we do not do frequently or regularly. Filing of tax returns, though an yearly feature, is quite often done with errors or omissions. Per current rules, the tax payer needs to file online if the taxable income exceeds Rs. 5 lakhs. An error or omission not only delays refunds but also many a time it results in penalty or prosecution from the Tax authorities. It is of paramount importance to avoid the following 10 common mistakes while filing an Income Tax return.
1. Discrepancy in Form 26 AS details:
Many taxpayers file returns without verifying Form 26AS credit (tax deducted at source, advance tax and self-assessment tax) as available to the IT Department. If the employer or anyone else who has deducted TDS does not deposit the same with IT Department or fails to report it correctly against taxpayer’s PAN, that amount will not reflect on Form 26AS resulting in a tax demand by the Tax department.
Hence it is imperative to check if credit for TDS, advance tax and self-assessment tax have duly been recorded on Form 26AS. Any discrepancy in Form 26 AS needs to be addressed before filing the tax return.
2. Incorrect personal details:
Every year a large number of returns are rejected for incorrect personal details like name, bank account number, IFSC code and address. This leads to delays in refunds. Hence, make sure you verify these details with your PAN.
3. Non reporting of exempt income:
Exempt Income’ like the PPF (Public Provident Fund) interest, dividends, , maturity proceeds of insurance policies need to be mentioned in the separate annexure of ITR (income tax return). Though this is not mandatory, this will reduce unnecessary income tax queries later.
4. Excluding FD Interest from your Income
Interest income from your savings account is exempt up to Rs 10,000, but interest income from your FD is taxable. In most cases, tax payers tend to miss this information for the purpose of computation of tax returns and later face the music from the Tax department.
5. Use the Correct Tax return Form.
The I-T department has prescribed many different ITR forms from year to year. The tax payer needs to be aware of the right form. Filing with a wrong form poses the risk of return being rejected and a revised return being called for.
6. Verification of Return:
Just e-Filing our ITR is not enough. The process of filing has not been completed yet. Once we submit the return, we will receive ITR-V on our registered email address. If the return is filed online, without the Aadhaar number or digital signature, we will have to verify our return post e-filing. We have two options. One can either send a physical signed copy of ITR-V to the CPC (Centralized Processing Center) at Bengaluru within 120 days from date of filing the return electronically or simply e-verify one’s income from the ease of the home/office.
7. Failure to account for more than one property:
Many of us own more than one property. These may be self-occupied or vacant. However as per the IT Act 1961, only one property can be claimed as self occupied. The other property is taxable at realizable municipal rates after deducting 30% for taxes and repairs.
8. Failure to pay advance Tax or self assessment tax:
Many of us have income from sources where TDS is not applicable. The individual is required to calculate the tax liability and pay Advance tax or self assessment tax before the closure of financial year, ie, 31st March. Failure to do so will attract penalty of Rs.5,000/- and interest at 1% per month.
9. Ignoring income from previous employer:
Every time an individual switches jobs, he is at risk of disclosing lesser income than actual. This is because the new employer does not take into account the income earned from the previous job. Hence, all the income earned from previous employers should be disclosed.
10. Not reporting foreign assets:
Usually assessees do not disclose their foreign assets or any other income from aboard. Mis-reporting overseas assets will not be taken lightly by the government. One may be prosecuted under the Black Money Act and the penalty could be as high as Rs 10 lakh for even small errors. Hence, it is important to disclose all foreign income as global income of a resident is taxable in India.
To conclude, it is important to remember the old adage “To err is human, to forgive divine”. With a slight modification, where IT errors are concerned, “to err is human, to rectify super human.” It therefore pays to avoid errors and file an accurate return.
CA G.Karthikeyan FCA Coimbatore