With the increased reliability of income tax on e- mode a large number of individuals opt to file their return on their own. While filing of ITR has several advantages but committing minor mistakes may sometimes attract huge penalties therefore one should be cautious while filing his own ITR.
In this article we will be discussing some of the mistakes which one should avoid while filing his ITR.
1. Identifying the correct applicable forms: The most common mistake that taxpayer often commits is to file a n incorrect form. There are basically 7 types of form which are applicable on the basis of nature of income or amount of earnings. The details of these forms are as follows
ITR 1: Resident individuals having income below 50 lakh which is arising from salary, house property or other incomes including agricultural income upto Rs. 5 thousand
ITR 2: Every other income above 50 lakhs that includes capital gains, income from more than one house property, foreign incomes, pensions, etc.
ITR 3: Individuals generating incomes from business and profession, turnover of business exceeding 2 crores, incomes from unlisted companies, incomes earned by partners or directors etc.
ITR 4: Incomes exceeding 50 lakhs, carry forward losses, incomes from unlisted shares, incomes earned by non ordinary residents, foreign incomes etc.
ITR 5: Incomes earned by firms, LLP , Association of persons, Body of Individuals, artificial judicial persons, local bodies etc.
ITR 6: ITR 6 is to be filed by the companies who do not claim exemption under sec 11 of the income tax act.
ITR 7: ITR 7 is required to be filed by persons who is required to furnish their return under section 139(4A), 139(4B), 139(4C), 39(4D)
2. Disclosing the actual amounts under proper heads-: It is very essential to disclose the actual amount of incomes under the proper income heads. There are total 5 heads of incomes which are as follows -:
2. House property
3. Profits and gains of business and professions
5. other sources.
3. ITR should be filed within the due dates -: The taxpayer should always be cautious about the last date of filing the ITR failing which he/she will be liable to pay the interest under section 234A which shall be a simple interest of 1% per month or part of a month.
4. Proving correct credentials -: The Taxpayer should always provide correct name, mobile number, email id, amount of income and their nature, PAN Details etc. Which are required to file an ITR
5. Details of all bank account which should be linked with the pan card -: It is now mandatory by the income tax department to link all your bank account details with the pan card. The taxpayer should report all the the bank accounts including demat account which are operated by him within India or outside India.
6. Reconciliation of form 26AS with ITR returns: It is very important to match the amount of ITR filed with that of form 26AS. Form 26AS includes all the income details, Tax deduction at source (TDS), advanced tax paid, Self assessment tax etc. Failure to comply with this rule can bring notice from income tax department for the same.
7. Claiming deductions if applicable: The taxpayer can claim a deduction up to Rs. 1.5 lakhs in an assessment year under section 80 of the income tax act. An individual generally gets confused while claiming deduction under the correct heads which ultimately leads to rejection.
8. Carry forward of previous year losses – : The taxpayer have an option to carry forward the previous year losses from one source to the profits earned from another source of income under the same head or any other head in the present assessment year. For example, Any loss earned from house property can be carried forward up to next 8 assessment years and can be adjusted under the same head only.
9. Filing revised return in case of any rectification in previous ITR -: Revised return allows a taxpayer to rectify its mistakes of the previous ITR into his present ITR and the taxpayer may file the revised return before the end of the completion of the assessment year.