Common Mistakes While Filing ITR
Listed below are some of the most common tax filing mistakes you can avoid.
Selecting an Incorrect Form
The appropriate ITR form for filing of returns must be selected. Failure can result in your return not getting processed by the income tax department.
Which form is to be selected depends on the sources from which income is earned in the financial year and the category.
All incomes that are taxable and/or tax-exempt are to be reported using the correct ITR form applicable. If the ITR is filed in the wrong type of Form, then the return will be termed as “defective”. Then, you will have to file a revised return using the correct form, within a certain time frame.
By using the LegalRaasta e-filing platform, where the selection of form is done technically, you do not have to worry about choosing the right form.
Not reporting all sources of income
A common mistake taxpayers make is failing to disclose all the sources of their income. The income must be disclosed whether it is taxable or exempt.
All incomes, not only the primary one earned from employment, profession, or business, are to be reported. Whether they are savings account interest, fixed deposit interest, rental income from house property, income from short-term capital gains, and any other source.
Remember, any income earned by a minor from interests, investments, etc. is taxable for the parent. According to the tax slab, an exemption up to Rs. 1,500 u/s 10(32) can be claimed when a minor’s income gets clubbed with the parents.
Not reporting such incomes might attract notice from the income tax department.
If you have switched jobs, make sure you report the income earned through your previous employer also. Not reporting such incomes might attract notice from the income tax department.
Providing incorrect personal information
Because all information will get recorded in the Department’s databank and may be verified, it is extremely important to enter the personal details correctly before filing your taxes. PAN number, name, address, mail id, phone number, date of birth, bank account number, IFS Code, etc. must be accurately mentioned. A minor mistake in these details means that you may miss your refund claim or some other important notifications. So check and re-check before filing.
Failure to Reconcile TDS with Form 26AS
It is important to compare ITR with Form 26AS before filing. Form 26AS includes all the income details, Tax Deducted at Source (TDS), advance tax paid by you, self-assessment tax, etc. TDS may have been deducted from your salary. You must verify the details of Form 16, issued by the employer, with the Form 26AS.
If the TDS is not reflected in Form 26As, your refund and tax deduction credit will be lost. The mismatched would lead to more tax being paid.
Not including exempt income
Income tax laws require all income to be reported, whether exempt or not. Many types of incomes are exempt from tax. For example, long-term gains, dividends, etc. Although you do not have to pay any taxes on them, you still need to report them.
Also, though your gross total income may not exceed the basic exemption limit, you are to file ITR in certain situations.
Entering the details manually
There is a set format for filing returns. All details are to be entered in a particular format, in the rows and columns provided. If incorrectly put in this complicated format, the returns will have errors. This is where taking professional assistance from LegalRaasta is recommended.
TDS paid then no need to file ITR
Employers are required to deduct tax at source from salary, and interest income respectively. It is mandatory to file an income tax return when your annual income exceeds Rs. 2.5 lakh. And report the interest income in those returns. You should disclose the income on which tax has been deducted and claim credit for TDS in the income tax return.
The interest on deposits with banks is provided after deducting a flat tax rate of 10%. You can claim a deduction under section 80TTA up to Rs 10,000 for interest earned on your deposits. For senior citizens, a deduction of interest up to Rs 50,000, can be claimed u/s 80TTB.
Missing out on the Deductions that can be claimed
A deduction of up to. Rs 1.5 lakh in a financial year by investing in certain funds and schemes. But how much can be claimed from these schemes is complex. Similarly, most taxpayers are not aware of some expenses that are eligible as deductions.