While filing Income Tax Returns, many people make errors which can result in a huge amount of penalty and interest which becomes an additional cost to the taxpayer. We are discussing herewith some common errors that a taxpayer can commit while submitting an Income Tax Return.
Many taxpayers assume that if taxes have been deducted in the form of TDS, then they are not supposed to file an income tax return because they have paid the full amount of tax in the form of TDS. But it is a myth. As per the Income Tax Act, if a person is a resident of India and his total income is above the basic exemption slab of income then it is compulsory for him to file his income tax return. No matter he has already paid his taxes. Even if taxes are paid, non-filing of income tax returns will result in a penalty.
Many taxpayers start preparation of income tax filings near the due date of filing. Due to last minute filing, a person can be exposed to the following errors:
Income tax department notifies income tax returns (ITR) forms every year according to the income and residential status of the taxpayers. For instance, a person with salary, other resources and ONE household property income/loss up to Rs. 50 lakh is supposed to file his income tax return in ITR form-1. But if he files his income tax return using some other form, then he may face litigation from the income tax department.
Before filing an income tax return, a person must go through his form 26AS very carefully. Form 26AS includes many information such as details of advance tax paid, details of self-assessment tax paid, TDS deducted on any income like interest, salary commission etc. If any income is appearing in form 26AS and missed to be included in the income tax return then the return will be processed in error and accordingly notice will be issued.
This is the most common error which a taxpayer commits. Impact of income tax in an incorrect assessment year is that the taxpayer has to discharge the liability again by paying tax in the correct assessment year. Therefore, a person must be very vigilant while choosing the assessment year while paying the taxes.
Many people assume that reporting of small income like savings bank interest, interest on bank FD is not necessary. But the truth is this thinking is wrong. A person is supposed to declare all of his income no matter what the amount is.
Missing to report exempt income is one of the major mistakes a taxpayer commits. Assuming that exempt income is not affecting the tax liability, most people do not report it. However, it is also mandatory to report the exempt incomes.
Even filing an income tax return is not sufficient. Even if a return is e-filed, in that case it is mandatory to e-verify the same within 120 days from the date of filing, otherwise your income tax return will be treated as invalid. Various modes of e-verification of income tax return are as follows:
I hope this article will help you to file your income tax return carefully.