Common Mistakes to Avoid while Filling ITR
Here are some general mistakes that you should be cautious of when filing your Income Tax Return:
1. Choosing the wrong form
If you opt for the incorrect form to File Income tax returns, you are in big danger. Why? Your return would not be taken into consideration by the income tax return department.
The preference for the ITR form depends on the income or category in which you fall.
You will obtain a defect notice from the department for your wrong return form, and you must rectify your mistakes in the stipulated time.
In case you are a salaried person with an income less than 50 lakhs INR with no capital gains revenue, the correct form for you for ITR filing is ITR 1. But, if you get income from a profession or business, then ITR 3 is the correct one.
2. Mentioning the incorrect Assessment Year
To File Income tax returns, one should give the proper AY. For the financial year 2019-20, the right AY is 2020-21. If you state the wrong AY, it raises double taxation with pointless penalties.
3. Providing false Personal Information
To File ITR, it is important to declare personal details like address, name, mail id, PAN, contact number, and date of birth. Also, cross-check the details mentioned in your PAN.
Moreover, if you are willing to claim a refund, ensure your bank details are correct, like IFSC code and account number, to avail yourself refund timely without any issues.
4. On deduction of tax on interest income, report it in ITR
- You might have savings accounts and fixed deposit accounts with banks.
- Financial institutes and banks render interest on account balances. They deduct tax or conduct TDS on the fixed deposits or the interest credited. There is no sort of TDS on the interest of a savings account.
- Thus, the interest credited to the fixed deposit and savings accounts is your income from different sources.
- You must report the interest income for income tax filing of returns. You can assert a deduction of up to 10000 INR under section 80TTA for interest earned on the savings account.
- For the senior citizens, a deduction should be claimed as stated in section 80TTB for the interest of 50000 INR. You can also proclaim a credit for TDS for ITR filing.
5. Not Revealing source incomes
- In case of any income from another source except the primary source, it should be mentioned.
- Whether the income is coming from a source like fixed deposit interest, savings account interest, income from short-term capital gains, or income from house property, you should disclose it.
- Several taxpayers forget to endow the details of exempt income but remember it is vital to share every particular.
- Instance: Even though the capital gains are not liable for tax till 1 lakh INR for equity-driven mutual funds or equity shares, the aspects of the gains need to be stated in the schedule pertinent for capital gains; otherwise, get ready to be answerable to the tax authorities.
6. Failure to settle TDS with Form 26AS
- It is necessary to check Form 26AS before ITR filing. Form 26AS comprises every income detail, advance tax paid, tax deducted at source(TDS), self-assessment tax, etc.
- Your employer might have deducted taxes from your source salary. A salaried person should check the details with Form 16 assigned by the employer with Form 26AS.
- If the TDS is not shown in your form 26AS, you will not receive a credit for tax deductions stated in form 26AS. Therefore, it is significant to add the correct info in form 26AS. Any mistakes between your Form 16, TDS certificates, or Form 26AS may direct you to more taxes and less refund.
7. 1HRA not provided by the employer
If a person does not deliver the rent receipts to the firm's HR, he will not obtain a house rent allowance. Usually, taxpayers do not know if they should submit their landlord's PAN to get the HRA advantage. Taxpayers can evaluate and claim HRA exemption during income tax filing.
8. Not Paying Self-Assessment/ Advance Tax
Every year 31st of March is the end of the financial year. Paying your taxes before the due dates are always recommended to avoid penalties and interest. Thus, taxpayers should clear their tax dues before 31st March of the financial year. If you fail to clear your tax dues, you will be fined 1% interest per month till your dues are cleared.
9. Donations are 100% not liable
Taxpayers have a general notion that donating money can bring tax perks. You should be aware that not every donation is eligible for a 100% tax exemption. Few are suitable for an exemption of up to 100%, while others are for a 50% deduction. Taxpayers must substantiate the claim deduction and donation receipt while filing an income tax return.
10. Interest on NSC is tax-exempt
If you contemplate that the interest gained on the National Savings Certificate (NSC) is nontaxable, you are absolutely wrong.
The interest is completely taxable. Though this interest is claimed as a deduction under Section 80C for every year(excluding the previous year), you should refer to this income as 'income from other sources to acquire the advantages of Section 80C or prepare to pay taxes for it.
11. Failure to transmit ITR V On Time
After you e-file your income tax return, e-verify your ITR-V through your Aadhaar Card, Netbanking, or the EVC procedure on your email and mobile number. It is crucial to corroborate your return since the IT department will initiate proceeding with your returns only after they obtain the verification. For a few reasons, if you cannot e-verify your return, you can sign and submit the ITR-V to the CPC through speed post.
Try to complete the process within 120 days from the date of e-filing of ITR filing.
Final Takeaway
We hope all the common mistakes during ITR filing are clear to you now. Don't forget to take care of everything before stepping ahead for income tax returns.
If there are so many tasks to be done and you do not want to take risks filling out the form at the last minute, then reach out to Lawgical India. We will help you select the appropriate form and guide you thoroughly well. Our team of experts will ensure to File Income tax returns properly without any hassles. Reach us now.
