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Mistakes to avoid while e-filing your tax returns
You have just three days left now for filing your income tax returns and avoid being penalised. Please avoid these 10 mistakes if you ae filing your returns online.
As human beings, we are accustomed to not act until the eleventh hour. Hence, the same behaviour is reflected while filing our tax returns. 99 per cent of the mistakes occur because we wait for July 31 and grumble about the system if we are unable to file our returns.
Through this article, we try to address the common mistakes, their implications and steps to avoid them:
1. Details of exempt income
Dividend income from Indian companies, long term capital gain on securities, etc. are exempt income and not chargeable to tax. There is a misconception to not disclose details of such income in the returns.
Remember that the brokerage house or investment company will send these details to the Income Tax department.
2. Sec 80TTA
Finance Act, 2012 has introduced a new section under which interest on savings deposit is exempt from tax up to Rs 10,000. However interest on fixed deposit and recurring deposit is taxable at the normal rates, and has to be disclosed under "Income from other Sources" in the e-form. The interest on NSCs is also taxable.
Mistakes to avoid while e-filing your tax returns
3. Choosing the wrong E-Form
There are seven E-forms of which four are applicable to an individual. Even though some of the software select the form on the basis of the data entered in the system, it is advisable to be aware of the changes in the forms.
Filing a wrong form renders the return defective or invalid.
4. Valid email address
Since all the communication with the IT department takes place via e-mail, we should provide a valid and functional e-mail address to facilitate correspondence with the IT department.
Mistakes to avoid while e-filing your tax returns
5. Not preparing books of accounts
Most agents who earn commission income do not prepare books of accounts. Commission income falls under the head income from business or profession and mandates filling of ITR 4. Therefore, simply bypassing this route and filing the return to claim the TDS deducted by the employer may lead to scrutiny under the I.T. Act.
6. Checking TDS details
Salaried individuals who earn interest on savings should log on to the IT department's website in order to check the TDS deducted by downloading 26AS. Tax credit for the TDS can be claimed in your tax return.
Mistakes to avoid while e-filing your tax returns
7. Mailing of ITR V in time
ITR V is an acknowledgement of the electronic return filed with the Department. It has to be sent by ordinary post or speed post to CPC, Bangalore within 120 days of filing of return. Many make the mistake of sending it via courier at the last moment.
8. Mandatory filing of returns
All individuals (other than senior citizens) earning above Rs 200,000 (before availing any deduction) are required to file their returns. Electronic filing of returns becomes mandatory if income exceeds Rs 5,00,000. Tax return papers are also required in case you are looking for a loan processing or have given in a visa application.
Mistakes to avoid while e-filing your tax returns
9. Claiming exemption twice
This is a common error committed by salaried persons who have multiple Form 16. They have worked under more than one employer in same financial year. While the Form 16 shows the deduction of the basic exemption limit twice, there will be tax payable as an individual can claim it only once. One has to be careful about incorporating the details of income from both employers to avoid discrepancy in the the IT department's records.
10. Reporting of Minor's Income
If you have made any investment in your children's name keep this mind. Income of minor is to be clubbed in the income of the parent with the higher income.
The Government has taken steps to make the process easier for the layperson. These dos and don'ts can only be implemented if you avoid the rush hour and act instantly.