Government rules pertaining to filing Income Tax returns have been set in a simple and clear cut manner. Every citizen who earns more than the stipulated slabs of Income has the responsibility to file Income Tax returns in set periodicities. To help citizens of India who fall into the Income Tax bracket file their returns easily, Government of India has enabled E Filing. E Filing has, has simplified the lives of all Tax Assessee who fall under the Income Tax bracket saving time and energy for them. However, some common mistakes done during the Income Tax filing process by individuals tend to complicate the process. Let us look at such common mistakes in detail so the information can benefit all concerned while filing Income Tax returns.
Filling details in wrong forms
One of the common mistakes most of us do is to fill in all the required details in the wrong form. Income Tax return filing spans across individuals of different categories as well as organizations. An individual filing Income Tax returns must understand the purpose of doing the same without any ambiguities. Ascertaining one’s financial situation in a perfect manner will help individuals choose the right Income Tax Returns filing Form while filing their Income Tax returns. A clear understanding of the Income Tax forms to be filled in prior to the exercise will also help in choosing the right form for filing Income Tax Returns.
For instance, an individual who is a salaried person must choose ITR 1 for filing their Income Tax returns if he has no other heads of Income to be declared. However, if an individual has other heads of Income like Capital Gains to be declared during Income Tax returns filing, he needs to go in for ITR 2. When Individuals who file tax returns choose the wrong form, they run a risk of their form getting rejected by the Income Tax Department.
Failing to mention source of all Incomes
Income Tax is an important aspect that needs to be dealt with honesty by individuals as well as organizations. Even people who are absolutely honest and willing to declare all pertinent information pertaining to their income fail to do so due to lethargy. Declaring the complete income along with their sources is mandatory when it comes to Income Tax returns filing. A clear understanding between taxable income and non-taxable income will help Income Tax Assessee to declare appropriate sources of the same.
It is mandatory that every individual who files Income Tax Returns declares appropriate source for all Income heads they declare in the form. Even if the types of Incomes declared during the Income Tax Returns filing process are exempted in nature, it is important that the source for every head is declared. Failure to declare source of Income in the appropriate ITR Forms while filing Income Tax Returns is considered as intentional concealment. Concealing pertinent information pertaining to the source of various types of Income is a punishable offence under the Income Tax Act.
Furnishing wrong personal details
With the new system of E Filing, it becomes mandatory to provide perfect details when filing IT returns. Furnishing wrong details pertaining to many aspects may lead to rejection of the returns you file for a fiscal year. Details like PAN Card number, Aadhar Number, Communication address, mobile number and E Mail ID are mandatory columns to be filled in while filing returns. Each of these details is used in a unique manner by the IT Department. For instance, after you file an E Return, for validation purposes the Income Tax Department sends a mail to the mail address you provide. This OTP (one time password) is required for process your returns. The OTP will be sent to your Mobile number that you provide while filing your returns online.
Providing wrong PAN Card number will lead to mismatch in Assessee detail leading to rejection of Income Returns one files. Furnishing correct details pertaining to the Assessee is a mandatory requirement when it comes to Income Tax returns filing. Submitting wrong details pertaining to personal information will be considered as an offence as per Income Tax regulations.
Failing to claim deduction in appropriate sections
Many Income Tax Assessees fail to claim deduction in appropriate section of the Income Tax Act. This is most of the time due to their ignorance pertaining to the Income Tax rules. Some fail to claim deduction under appropriate sections owing to lethargic attitude. Many fail to claim deduction in appropriate section owing to misunderstanding about the various sections. Irrespective of the reason why an Income Tax Assessee fails to claim deduction under the appropriate sections, the failure leads to increased tax liabilities.
Given below is an example for failing to claim deduction under appropriate sections. Deduction for Housing Loan must be claimed only under section 80C and deduction for Employee Provident Fund must not be claimed under this section. Deductions towards investments made in certain venues can be availed under Chapter VIA. Anyone who fails to claim this deduction may not only lose the exemption but also get deprived of the opportunity to get a tax refund. In order to avoid losing money due to negligence, enough care needs to be taken while E Filing Income Tax Returns.
Not disclosing all properties
Many Income Tax Assessees intentionally hide declaring information about all the properties they own. This is mainly due to the fear of losing properties for unwanted reasons. Some hide information about multiple properties while E Filing Income Tax owing to the fear that they may have to pay more tax. Hiding information about multiple properties or any type of negligence to disclose the same during E Filing is considered as an offence as per the Income Tax Act.
Declaring property details while E Filing Income Tax Returns will enable claim refund towards one property which acts as a benefit to the Assessee. If an Assessee has more than one property and fail to declare all while E Filing Income Tax Returns, it will be considered as an offence under the Income Tax Act. This concealment will attract penalty as per Income Tax Act and the Assessee may lose more money directly and indirectly. This act of not declaring all properties owned by the Assessee amounts to concealment of Income and considered as violation of Income Tax rules.
Not checking Tax credits
One aspect that many Tax Assessees who are regular in filing their Income Tax returns miss is to monitor Tax credits to their accounts in a periodic manner. Such Assessees meticulously pay their taxes and file returns towards the same within the time period stipulated by the Income Tax Department. They file their returns providing all pertinent details about their properties, income and sources for the same. They do not hide anything from the system intentionally but prefer to provide as much information about their financial dealings as possible.
One aspect such sincere Income Tax Assessees miss to check before filing their Income Tax returns is Form 26AS. This is the format that captures pertinent information like Income from all possible sources you have created, Tax already deducted at source, any advance tax paid within the given time frame by you based on self assessment and balance tax to be paid if any. Cross checking the income viz-a-viz tax details mention in Form 26AS is a crucial step to be carried out before filing the final Income Tax Returns. This will help you clear any possible discrepancies that arise between the actual filing and the form. Avoiding discrepancies between the filing and Form 26AS will help you get appropriate refund without losing money on the same.
Misfiling wrong TDS details
Many among us are highly disciplined when it comes to filing Income Tax returns. We ensure we file our tax returns within the time frame set by the Income Tax Authorities. We are even honest in declaring all pertinent information regarding our income and their sources end to end. Most salaried people in particular are regular in filing returns since tax is deducted from their base salary by their employers. While this seems to make their tax filing efforts easier, this may become the pain point if care is not taken in certain aspects.
Ensure to check for the TDS deductions your Employer does from your salary in set periodicities. Ensure also to check if what is deducted from your salary is deposited in your TDS account by your Employer on time. While it is a fact that your Employer will be paying the penalty if he remits your TDS amount late, it may also cause a dent when you file your returns. The TDS amount that has not been deposited to your credit by your Employer to the Income Tax Department may make you run behind the refund process. Form 26AS records all tax deducted by your employer from your salary. Cross checking for the details in these forms before filing your tax returns will help you stay away from misfiling wrong TDS details.
Double deduction of TDS
Some of us may have suffered double deduction of TDS particularly when we have switched jobs within the fiscal year. Double deduction of TDS tends to happen when both the previous and current Employers deduct tax from you for the complete fiscal year. This happens when the current employers assumes that no tax deduction has happened from your salary the earlier Employer paid till then.
It is important that you declare complete information pertaining to the TDS deduction to the current Employer as soon as you switch job. Providing the complete information pertaining to your TDS deductions with your earlier Employer to your current Employer will help him get the perfect picture. This will also safeguard you from losing money due to double deduction and waiting for refund later.
ITR-V verification is important
Most of us feel relaxed as soon as the TDS E Filing process sis over for the fiscal year. One step that we miss to follow is verification of ITR-V form. As soon as you E File your TDS returns, the Income Tax Department sends an acknowledgement to your registered mail ID. If you have E Filed your TDS returns along with digital signature, this acknowledgement need not be sent back again to the Department. If you have not digitally signed during the E Filing process, it is important that you print the acknowledgement you receive through mail. This must be duly signed and sent back to the Income Tax Department via speed post.
This acknowledgement form is termed as ITR-V. It must be sent back to the CPC within a time frame of 120 days from the date of filing the returns. It is the responsibility of every Assessee to follow up CPC on the receipt of the ITR-V through the toll free number 1800-425-2229. This follow up action with the CPC must be done with a maximum of 7 to 10 days of sending the same through Speed Post. In case the Assessee gets to understand a non-receipt of their acknowledgement by CPC, it is important that the copy is resent again and the follow up process done.
Failure to remit Advance Tax based on self assessment
It is important that Income Tax Assessees make a realistic self assessment of the tax they need to pay for any fiscal year. Based on this assessment, Advance Tax must be paid before 31st March of the current year. This will safeguard the Income Tax Assessees from paying penalties that range up to 1% of the liable amount per month between 1st April of the current year and the end of the fiscal year.
Following all the steps given above will help the Assessees to save time and efforts on their tax filing process. This will also help Assessees avoid wasting time following up for refunds. Follow the above tips and ensure you save money on the tax aspect while still adhering to the rules set by the Income Tax Department.