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It is required from every taxpayer to accurately file an Income Tax Return (ITR) for the Income Tax Department to conveniently collect the correct amount of tax.

ITR filing is a complex task. Each and every process needs proper attention and adherence to the guideline of the Tax Department. While filing an ITR ensure that you provide the exact information that is asked, because any carelessness from your end may lead to higher tax outflow or penalties.

Today’s story features the challenges faced by an assessee while filing an ITR:

1. Which is the correct ITR?

There are a total of seven ITR forms. Each form has its own clause. The taxpayer has to choose among them based on his source of income. Basically, ITR-1 is for the employees whose source of income is their salary, but there are more terms of eligibility for filing ITR-1, not every salaried individual is eligible to file ITR-1.

Here comes an issue for a taxpayer in choosing the correct ITR form.

Challenges While Filing ITR

2. Getting the correct numbers of taxable income.

Income from each and every source has to be mentioned in ITR. A taxpayer needs to mention all his income in ITR whether it is from rentals, drafts, interests, agriculture gains, short term/long term gains, etc. In such a situation, it becomes complicated for a taxpayer to accurately calculate his taxable income.

Computing taxable income from multiple sources becomes an issue.

3. Getting the absolute sum of deduction.

Due to a lack of knowledge, many taxpayers fail to claim their deductions. Mentioned under section 80C of the Income Tax Act, a taxpayer can claim deductions from income up to 1.5 Lakhs in a financial year. This can be claimed by showing investments in financial bodies or other expenses like your child’s tuition fees.

Under section 80CCD (1), any contribution up to 1.5 Lakhs made by an individual in the National Pension System (NPS) is liable for claiming deductions. However, an additional contribution of Rs. 50,000 can be made in NPS and deduction can be claimed on that 80CCD (1B). Total of Rs. 2 lakhs can be claimed as deductions under two separate sections.

Another is the case of Insurance Policy. You can claim an amount paid in an insurance policy under section 80D. Various other deductions are available under section 80 that you might not be aware of and this lack of information may prevent you from claiming proper deductions.

4. Mentioning correct Tax Direct from Source (TDS)

While mentioning TDS you must take care that it is the same as mentioned in form 26A and form 16 or 16A.

To be noted, TDS is not the only deductible from your salary but also from your fixed deposits. If the TDS entered is mismatched from 26A, then the return filed will be incorrect.

5. Unable to get HRA tax relief.

There are various sources online to help you calculate House Rent Allowance (HRA). Calculating HRA exemption is important as this will help you to know how much exemption you will get on your income.

To avail HRA relief, sufficient documents have to be submitted to your HR department. If you are living on rent and paying above 1 Lakh per annum as rent, then you must submit rent receipts, rent agreement and PAN of the Landlord with your company’s HR department.

6. More than one Form 16

This is related to the case when an employee switches a company in a financial year. In such a situation you not only need the form 16s from your current employer but also you need the form 16 from your previous employer as well. In hand you have multiple 16s forms, this sometimes causes difficulty in filing ITR.

7. When an employee forgets to submit tax proofs to the employer

Ensure that you submit your tax declaration with all the relevant documents to your employer on time. If you fail to do so, you may get barred from availing tax benefits from your salary income or other exemptions. All the proofs provided by you will be mentioned in your form 16s, which you can claim at the time of e-filing.

8. You don’t remember your login credentials

Since the account is handled once a year, there are possibilities of many to forget their ITR account password. In such situations, recovering the password could be tedious. On the other hand, many taxpayers are solely dependent on their CAs to file ITR, so if in case that CA is no more working for them, how will they further operate the account without knowing the credentials.

In any of the above cases, it is a must for a taxpayer to keep the password and other credentials saved with him.

9. Unable to pay advance taxes on time

In case of a taxpayer’s tax liability is above Rs. 10,000 in a financial year, then they are asked to pay advance taxes for that financial year. Advance taxes under some conditions are applicable to all, whether its a salaried individual, businessman or a freelancer.

The assessee has to pay advance taxes in quarterly installments:

1. 15% on 15 June or before (minus advance tax already paid)

2. 45% on 15 September or before (minus advance tax already paid)

3. 75% on 15 December or before (minus advance tax already paid)

4. 100% on 15 March or before (minus advance tax already paid)

There is a penalty in the case of failure or delay in paying advance taxes.

10. End moment filing an ITR

Filing an ITR is already a complex task and above that, if you leave this task for the last moment, then there are chances you file an incorrect ITR. If you file a wrong ITR, that ITR will be rejected and you will have to again file a corrected one. Delayed filing of ITR will lead you to face a penalty.

Author Bio

I am CA Amit Gupta and having experience in tax blogging, I have more than 20 years of experience in conceptualizing, developing, and marketing software in the financial sector. Having worked from grass root level to the top management level, I have gained a profound understanding of the problems fa View Full Profile

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April 2024