Archit Gupta -- founder and CEO, ClearTax.com -- lists common mistakes and how to avoid them for filing a hassle-free income tax return.
Illustration: Dominic Xavier/Rediff.com
As we are closer to the due date for filing returns, which is July 31, taxpayers gradually start getting stressed out and anxious about the whole process of return filing.
On account of this, errors or omissions in the return cannot be ruled out.
Hence, it is important that you take utmost care while filing your tax returns as the committing of even the smallest of errors may entail a redo of the entire process of return filing by way of a revised return.
Here are some very common mistakes that can be committed while filing return, which, with a little amount of care, can be avoided:
1. Filing wrong ITR form
Due care needs to be taken while selecting the ITR form applicable to you.
Based on your income and its sources, you should select the relevant ITR form.
Failure to choose the correct form will result in non-processing of your return.
The income tax department considers this as a defective return and will ask you to file a revised ITR with correct form.
For example, if you are an individual having income from business or profession, you will have to file ITR-3, while if you have salary income below Rs 50 lakh and no capital gains income, the appropriate form is ITR-1.
Interestingly, if you are doing your returns through any of the online tax filing platforms other than the government portal, most of these platforms themselves choose the appropriate return for you based on the income details you provide.
2. Incorrect personal details
You should fill correct personal details such as your name, Aadhaar number, phone number, date of birth, address, e-mail ID, etc., in the income tax return.
You should also ensure that the details are tallying with your PAN.
Further, if you are claiming any refund, make sure that the bank details provided are accurate to receive your refund hassle free.
Also, you are required to report details of all bank accounts held by you except dormant accounts (inactive accounts for past three years).
3. Non-reporting of income from all sources
You must disclose all the incomes you have earned in any financial year, even if it is exempt under the Income Tax Act.
For example, interest income from savings bank account is allowed as deduction under section 80TTA upto Rs 10,000 but should be disclosed.
This proves the transparency about your income. Therefore the simple rule is to disclose and then claim an exemption in the return itself.
4. Not disclosing income from last employment
If you have switched jobs in between any financial year, income from your previous job should be mandatorily disclosed in the income tax return.
If any income is not reported, you will be penalised for under-reporting or mis-reporting of income.
5. Not clubbing incomes
If you have invested in the name of your minor child or given money to your spouse for investment, the income coming from those investments are to be added to your income.
The same has to be disclosed in your income tax return in case such income is not offered by your spouse in her/his tax return.
6. Failure to reconcile 26AS, Form 16 and Form 16A
You are advised to reconcile the income and taxes thereon in Form 26AS with details appearing in Form 16 and Form 16A.
Form 26AS includes all incomes, taxes deducted thereon, advance taxes if any and self assessment tax.
Form 16/Form 16A is the certificate received from the tax deductors as the proof of taxes deducted on the incomes earned by you.
You should address any mismatch before you get started with filing your return.
7. Failure to verify ITR-V
Your filing process is not over by just uploading your income tax return. You must verify your return.
Now, that the verification process has also been simplified with the introduction of e-verification, there is no reason for you to miss out on this process.
You can e-verify your ITR-V (acknowledgement) via netbanking, Aadhaar OTP, or through EVC process on your registered mobile number or e-mail.
If you are unable to e-verify, you can sign and send the ITR-V to the CPC via speed or ordinary post. This has to be sent with 120 days of filing income tax return.
The income tax department will start processing your return only after the return is verified. Otherwise, it will equal to non-filing of your return.
To sum up, it is always advisable to take that extra care while filing your return to make it error free.
Yet, to err is human. And the law provides for revision of a return for correcting mistakes in the return by allowing you to file a revised return. And this needs to be done before the end of the relevant assessment year.