Tax filing can be a difficult one with numerous risks that could lead to expensive errors and frustrations in the future. You must seek knowledgeable guidance to navigate this complicated world with confidence. This post will examine a number of common tax filing errors and provide insightful guidance to help to avoid these issues.
1. Selecting the incorrect form: Selecting the wrong tax form to file is one of the most frequent errors people make. Because each form is specific to a particular taxpayer profile and type of income, using the wrong one could lead to errors and processing delays. Taxpayers are advised by a CA expert to carefully review the qualifying requirements for each form and, if unclear, to seek professional assistance.
2. Correct treatment of donations made: Section 80G of the Income Tax Act allows donations to charities to be tax-deductible. However, CA advises against claiming deductions for donations without adequate paperwork. Taxpayers should donate to qualifying organisations and acquire receipts to claim deductions.
Read more:- Income Tax return (ITR) filing 2024: What is Form 16, issue date and Important
3. Proper treatment of ESOPs: Employee stock ownership plans, or ESOPs, present unique tax challenges for employees because they include Restricted Stock Units (RSUs). CA emphasizes how important it is to understand the tax implications of ESOPs, including share valuation and tax timing. To make sure that their ESOPs adhere to tax regulations, taxpayers should consult an expert.
4. Proper treatment of F&O transactions: Transactions involving futures and options (F&O) can be challenging, especially when it comes to tax implications. advises to provide accurately report all F&O transactions—profits and losses—on their tax returns. The Income Tax Department may issue tax notifications and fines if this isn’t done.
5. Computation for two or more job changes in a year: Taxpayers who change employment often throughout a fiscal year must precisely compute their earnings from each employer for tax purposes. To minimise errors in tax forms, keep thorough records of their income from each employment, including salaries, allowance, bonuses, and perquisites.
Read more:- Income-tax return filing: Should you file your ITR in April or wait until July 31?
6. Computation of capital gains from land purchase sale: The capital gains tax implications of selling land or other property that was purchased on extended payment plans—like those offered by local governments—must be carefully considered. To accurately determine capital gains, accounting for the longer duration of payment as well as possible deductions or exemptions.
7. Tax deducted from interest income: A lot of taxpayers are unaware that they do not have to report tax deducted at source (TDS) on interest income from savings accounts or fixed deposits on their income tax return. file their ITR with only the net amount of taxable interest income and reconcile their TDS certificates with Form 26AS.
Hints to avoid common mistakes
In addition to avoiding common mistakes in tax filing, taxpayers should stay up to date with new amendments and changes in the law. Refund claims and tax liabilities can be significantly impacted by modifications to tax laws, exemptions, and filing procedures. In order to ensure simple and accurate filing, taxpayers should also make use of the online filing tools and website provided by the income tax department. To guarantee an easy tax file, it is also essential to maintain thorough records of all financial transactions, investments, and deductions made throughout the year.
Read more:-ITR: Summary of income tax return forms ITR 1 to ITR 7
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