Most of the Individual taxpayers file their own ITR themselves. Since income tax is a complex law, an ordinary tax payer is bound to commit certain mistakes while filling the ITR forms. In this article I intend to discuss some of the most common mistake committed by individual taxpayers while filling the ITR and which can be avoided.
The schedule for furnishing details of capital gains “CG” is the most complex part of the entire ITR form. There are different holding period requirements for different classes of assets for qualifying as long term capital asset. Even there are different tax rates for different category of long term and short term capital gains. And coupled with various exemptions available in respect of various long term capital gains, filling up the CG schedule is herculean task for even for a well-informed Chartered Accountant. So an ordinary taxpayer needs to be extra careful while filling it up. Be careful in bifurcating your taxable capital gains in each of the four quarter for computation of advance tax liability as the law requires you to pay the capital gains tax instalments for capital gains in the balance instalments falling due after the capital gain transaction. A small error may cost you in terms of higher interest. Likewise, you are also required to furnish details of capital gains taxable at the different rates. Any incorrect information furnished may result in incorrect payment of taxes and issue of notice by the income tax department.
With increased digitisation, the income tax department is increasing relying on electronic communication. So instead of sending you physical communications the income tax department nowadays sends you all the communications including various notices on the email address and mobile number registered with them. So it is important for you to ensure that these details are upto date with income tax department. So please verify that the email address and mobile number currently in use are the same which get prefilled in the ITR form as per their records. In case you have changed your mobile number or email address recently, please update the same under your profile. Please do not use the email address and mobile number provided by your employer but preferably use your personal email address and mobile number to ensure that there is no break in case you change your job.
As the income tax department in most of the cases remits the income tax refund in the bank account directly, it is important for you to ensure that the bank details opted for credit of the income tax refund are correct. In the eventuality of you having furnished wrong information about your refund bank, the refund will not get credited to your account. In order to get such refund, you will have to go through the tedious process of making request for reissue of refund. So ensure that the details like account number, IFSC code etc. are correctly mentioned. If possible, do not use the bank account for refund purpose which you are planning to close in near future. The employers generally ask the new employees to open a bank account with a bank as desired by the employer for getting credit of salary. If possible, do not use such an account also and instead use your personal bank account as you may close it after leaving the job without realising that you have furnished details of the same account for your income tax refund.
As the taxpayers are not allowed to attach any document as proof of payment of taxes with ITR, the credit for TDS is given on the basis of information available with tax department. So while filling details of TDS, please ensure that the TAN number of the deductor is correctly mentioned as per form no. 26AS. Likewise for taxes paid by you ensure that the details of challan number and BSR code for payment of advance tax and self-assessment tax are correctly reflecting in in the ITR. In case of even a minor mistake, you may not get the credit for the taxes and may even get a demand notice and in order to get the matter straightened you will have to go through the hassle of filing rectification request under section 154 to get the error corrected.
Those of you who had stayed abroad even for a short spell and had opened a bank account have to submit details such bank account/s in case the same was not closed before you came back to India. This you have to do even if you had withdrawn the entire balance emptying the account. In case any bank account still remains in your name which is not yet closed, you cannot use the simplest ITR i.e. file ITR 1 but will have to use ITR 2 and furnish details of such bank accounts.
So those of you are abroad please ensure to close your bank account before you come back to India to avoid the need to file more elaborate ITR form.
Balwant Jain is a tax and investment expert and can be reached on [email protected] and @jainbalwant on twitter