Income Tax Return (ITR) filing is one of the most important responsibilities for income earners. Every person earning income from different sources have to necessarily file their return. Most people easily think that it can be avoided. Generally, while filing ITR, there are some common mistakes that everyone must avoid at all cost.
Speaking on the common mistakes, the first and foremost thing that an earning person shall keep in mind is filing of the ITR on due time. Apart from that, selection of ITR Form, mismatch in 26AS, either not disclosing the income or not disclosing the bank accounts are some of the common reasons which may lead to an Income Tax Notice. Nowadays, since the tax records are integrated online, so even a small mismatch detected can result in an enquiry.
Here, through this article I have listed out some of the following mistakes that can result in getting a notice, if not followed:
Every year the income tax department releases new and 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 last year based on the changes. They may also have to disclose additional details due to introduction of new fields which are added every year. The selection of incorrect form may lead to an intimation from the Income Tax department.
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 attracts penalty, but also robs you off certain benefits. For instance, losses from capital gains or business or profession cannot be set off in subsequent years in case of late filing.
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.
This is a mistake many salaried individuals make as they may also be earning some interest on Fixed Deposit or may have capital gains on debt/equity instruments. Thus, it is very 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 of the Income Tax Department.
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 Income Tax Website. Before filing return, it is extremely important to reconcile your income with that reflected in Form 26AS and Form 16/16A. And in case there are any discrepancy, you must inform the deductor immediately to correct it from his end.
When one switches his job, there are chances of falling foul of income tax laws. In such scenarios, the new employer does not consider one’s previous income while calculating tax and one get tax exemption all over again on the new income twice. This actually results in almost no tax paying as compared to what that is payable.
Sometimes, due to a lack of awareness people miss out on opportunities for claiming income tax deductions. It is possible that you may have not been able to submit 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 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.
Despite all, if one receives income tax notice related to non-filing of ITR, TDS claims, documents verification etc., one does not need to worry because such issues can be resolved in not more than 24 hours. Consult a tax consultant for more information about income tax and filing an ITR.
Here’s wishing everyone a stress-free tax return filing season.