ITR: 10 mistakes to avoid while Filing Income Tax Return
Income Tax Return: Some common mistakes being made by taxpayers are as follows:
1. Filing return using wrong form
The taxpayer should assess the income from all sources and should file the return accordingly because filling wrong ITR would result into defective return which shall require taxpayer to further file revised return of income by due date. For instance, if you are a salaried person, then you should file ITR 1 but if you also have some income from investments, then individual cannot opt for filing this ITR 1 instead one has to file ITR 2. Read More at 10 new Changes in Income Tax Return Forms for A.Y. 2020-2021
2. Not revising return despite knowing the error
Generally, return has to be filed within the due date but in case if it is not filed within the due date then a belated return is filed. Once a return is filed and taxpayer come across any error in return of income then he/ she can file revised return, due date of which would be earlier of completion of assessment or last date of relevant Assessment year, to rectify mistakes.
3. Incorrect Personal details
Providing correct personal details is of utmost importance such as name, aadhar number, PAN number, bank details, etc. For instance, if bank details are not provided correctly then the person may face issues relating to claiming refund in bank accounts.
4. Non reporting of Exempt income
If a taxpayer is not providing details of exempt income assuming it to be irrelavant for tax purpose as no tax is becoming payable on the same but then he/ she might face consequences of income tax department as ITR asks even for Exempt income during the period.
Read Also: 15 Reasons you may get Income Tax Notice
5. Not reporting income on which tax has been deducted or collected
Usually, tax is deducted from payments received from services provided. The amount of tax deducted is reflected in 26AS and thus, if taxpayer is not showing such income on which tax is deducted then discrepancies is going to occur which may result into under reporting of income and income tax notices. Read More: 12 New transactions in New 26AS making disclosure of total 25 transactions
6. Reconciliation of turnover under Income tax and GST
The income tax department and GST has done an agreement to share required details among them to curb tax evasion. For instance, you file GST return where you provide details of turnover and while filing income tax return, details of turnover is also provided. Though the turnover is not going to be an exact match but if the variation is high then, income tax may serve you with notice. Read More: GST Turnover v/s Income Tax Turnover
7. Unreported Incomes
A taxpayer must report all the income which he or she earns from Investments such as Income from investments or capital gain on sale of investments, fixed deposits income, etc. For instance, if you have capital gain during the year and you have not reported such income in your return then you may get notice from the department as these are considered as high value transactions which are being reported by some institutions such as Banks in SFT i.e. Specified Financial Transactions. Read More at Penalty for not showing the income in Income Tax Return
8. Not dispatching ITR V in time
Once the Income Tax Return is filed and signed through digital signature, the process gets complete. However, if there is no digital signature then the taxpayer has to take the print out of form ITR V after filing the form and has to post it to CPC Bangalore within 120 days of filing of return. Thus, if one has to digitally signed the return of income then the process of filing return gets completed once ITR V has been sent to CPC Bangalore otherwise return would be considered as invalid or void.
9. Income of spouse or minor children not being clubbed
As per income tax, one may have to clubbed the income of spouse or minor children if such section gets applicable. If such incomes are not being clubbed then the taxpayer may get notice from the department for under reporting of income and accordingly interest or penalty may get charged.
10. Documents requirement for claiming Deductions
Documents are most important for claiming deductions as these are proof of expenditure being made that are eligible for deductions. Absence of any such document may result in disallowance of deduction. Everything that is in return must have supportive documents to avoid getting queries from the tax department.
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The author of the above article is CA Rahul Gaur.
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