Mistakes to be avoided while filing your Income Tax Return

Last Updated On: Dec. 27, 2021, 10:21 p.m.
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What are the mistakes to be avoided while filing your ITR?

 

Have you filed your Income Tax Return? The Deadline is almost here. Hurry up!!

 

This article will help you to avoid mistakes while you are filing Income Tax Return.

 

Keep your Form 16 and Form 26AS ready. Form 16 is the TDS certificate issued by your company/employer, and Form 26AS captures all the TDS/TCS deducted from various sources.

This year, you must decide whether to follow the old regime or new regime. In the new regime, the tax rate is lower, but you must forgo specified tax exemptions and deductions. I recommend you to calculate your final tax payable under both regimes and make an informed decision about how to proceed

 

Let us discuss where all you can make mistakes when you are filing Income Tax Return

 

Declaration of House property – If you own more than one house, then you are liable to consider in computation of Income tax on it. Not declaring such properties is the second-most common mistakes people make while filing tax returns.

 

Not reporting interest income from Saving Banks – One should report all the interest incomes received or accrued due to him in the previous financial year (for which the return is being filed) while filing his tax returns. Individuals generally forget to report interest earned from savings bank account, fixed deposits, recurring deposits, etc. under the head ‘Income from other sources’. While interest received or accrued on fixed and recurring deposits are fully taxable.

 

Declaring falsified income source – While this may not be classified as a mistake, many tax professionals try to move people into filing surge returns to earn more tax benefits.

 

Choosing the right ITR form – As per tax laws, an individual is required to report all sources of income and file ITR using the correct form applicable to him. If he files it using the wrong form, then his filed return will be treated as ‘defective’ and he will be asked to file a revised ITR using the correct form. If the defect is not rectified within the time limit, then the assessing officer will treat it as an invalid return.

 

Not reporting all income sources – If you do not report all your income sources while filing income tax return, then IT department is likely to treat it as concealment of income and may subject to tax and penalty.

 

Ignoring the form 26AS & TDS Certificates – The tax deducted or collected by an entity is reflected in Form 26AS of the respective PAN and this helps in identifying any discrepancy or error. One need to check and match such TDS credits with the income he is showing in ITR. He should also check the he got the correct tax credit in the form 26AS which is a consolidated tax statement (Form 26AS) and a proof of tax deducted on your behalf as well.

 

Not filing income tax returns– Many people don’t file their income tax returns who either do not have the income is below the tax-exempt income level or they have the exempted income eg. Agricultural income, dividend or capital gain. There are also sme cases where people have loss in business or stock market and do not file the ITR thinking that it is not required to file but they need to check the law carefully in each cases and also consider the benefits of filing the ITR even there is no income tax.

 

Selecting wrong year for return – People often get confused about the year of filing their returns. You have to be clear about the year for which you are filing ITR. The simple way is to consider the financial year of your income as the Previous Year. The following year in which your income is assessed and return is required to be filed is called as assessment year. In current context the Assessment Year is 2020-21 while the Previous Year is 2019-20.

 

Failing to revise your income – If you have discovered any error once tax filing has been completed, then you must rectify your mistake. You must file the revised return to rectify your mistake. Current income tax laws allow you two years to file the revised returns..

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