People who have taxable earnings are expected to file their income tax return. Submitting accurate details and IT returns is crucial. Some basic errors that we usually make in income tax return are listed below. These mistakes could result in a tax notice trouble. So better to avoid it.
List of the errors that we often make is:
1. Filing wrong Income Tax Return form:
As per IT regulations, a taxpayer must file the income tax return via correct ITR form. Our filed return will be treated as “defective” if we use the wrong form. IT Department will then ask us to submit it again using prescribed ITR form. In response to notice under section 139(9), we need to file the return in 10-15 days. IT assessing officer may extend this limit on your request. If still the error is not corrected within given time frame, they can terminate your return as “invalid.”
2. Personal details error:
Error in filling personal details like name, bank account number, bank code and permanent address is the biggest reason behind invalidation of return. These small errors lead to obstructions in refunds. So we should make sure to fill correct personal details.
3. Failure to incorporate some assets:
There may be certain assets which are left out. For example; 1. Bank FD. Yes, the credit on Fixed Deposit is taxable. 2. Earnings from investments made in the name of Wife/husband/children. 3. Income from the previous job.
4. Errors in claiming Abatements (under IT section 80C):
Some people believe that contribution of the employer to EPF (Employees Provident Fund) should go to section 80C benefits claims. That’s not right. Similarly, only the first refund on house loan is qualified for section 80 C (IT). If we are claiming other tax deductions under the wrong head, it will lead to rejection and tax liability will increase.
5. Interest earnings not reported:
The interest exemption is up to INR. 7000 (joint account) and INR 3500 (personal account). We need to report all the interest earnings gained due in the financial year (for which we are filing a return). We may not care to report interest earned on savings bank account, FDs, etc. While interest earned on fixed deposits are entirely taxable, we can demand tax relief on interest from the savings account up to a specified limit. Income Tax Act (section 80TTA) says that interest up to Rs 10,000 will be deducted from the cumulative benefit gained annually from post office/bank account.
6. Neglect to file Income tax return:
Some people believe if they have capital benefits which are tax-free and their total annual income (minus tax exempted earnings) is less than tax exempted income level, they won’t have to file ITR. Though, as per current revisions in section 139 (1) of the IT Act, if your spared long term capital earnings along with total gross revenues surpass the least exemption level, you are liable to file your tax return.
7. Errors in filing TDS details:
Verification of form 26 AS (Tax levied on the source) is must before filing returns. If your employer or someone who has deducted the TDS fails to deposit the same with Department, the amount will not exhibit in form 26AS. Therefore make sure that Form 26 AS has mention of credit for TDS. Correct it in time if necessary.
8. Failure to report all properties:
Many individuals nowadays own more than one properties, which may be self-occupied or vacant/rented. However, as per the IT Act (1961), We can claim only one property as self-occupied. Any other assets come under taxable property category after subtracting 30%vor as applicable for taxes and repairs.
9. clubbing incomes of Family:
As per the rules of IT act, an individual is expected to calculate the income of designated family members (children, wife, husband, son’s wife, and any other directly related) to his assets as the tax to pay will be computed by adding this incomes revenue. When the Parent’s income includes the income of the minor child, this case arises. Clubbing of incomes is specified in IT act, provision 60-64.
10. Earnings from the last job:
You may have changed employment in a financial year. Then you must state the income from your the former work while filing income tax return. Failure to do so, miscalculation is bound to reflect in your form 16, TDS certification, and Form 26AS.
11. Mention of All Bank Account:
From the evaluation year 15-16, An individual is expected to report all the bank accounts in his name. Earlier, we were obliged to mention a single bank account in which we may want to receive the credit of the IT refund (if necessary). However, now only inoperative accounts are omitted from the obligation of reporting in the ITR.
12. Dispatch of ITR V in time:
It is obligatory to send appropriately signed ITR V to CPC (Centralized Processing Centre, Banglore) by speed post If you do not have the digital signature. Use blue/black ink to sign it in the box given. We must send ITR V within four months of filing returns. If we fail to do so, consider it null and void.
13. Not stating Rent:
In case you have another house along with one self-occupied, and it is unoccupied, then you have to report the presumed rent in your total gross income.
14. Revision of your income is necessary:
Once you found any discrepancy in tax filing, rectify it as soon as possible. File the revised return to correct your error. Income tax rules provide you two years to file the amended returns. Though, from the fiscal year 2017-18, an individual will get only one year for this.
Inaccurate filing of tax returns leads to several headaches and problems. We do not want this. So let us avoid mentioned mistakes. If you are not confident enough to file a return by yourself, take professional help. It is better to submit IT return accurately as well as on time for hassle free life :))).