Here are some mistakes taxpayers make and how to avoid them...
With the online tax filing and automation of the tax process the number of mistakes made by taxpayers during filing of taxes have been reduced, but considering the importance of the information, a mistake or an error will be an invitation to trouble.
1. Choosing the right ITR forms
Since there are many ITR forms (series), the most common confusion is which ITR form to fill. As there are different categories of ITR forms having different categories of information. So it is advisable to first check the ITR form which needs to be filled by the assesse (that is, you, the taxpayer)
2. Do not fill multiple ITRs
It is common that people change jobs within a financial year, and on changing a job within the financial year a taxpayer will have more than one ITR form. The common mistake which a taxpayer makes is filing multiple ITR forms for multiple Form 16s instead of having one ITR form for all the Form 16s.
3. Enter correct PAN (Permanent Account Number)
PANs are one of the most important set of information, because the entire record of past and the future transactions will be stored based on the PAN disclosed.
4. Enter correct bank detail
Often noticed that the taxpayer do make simple mistakes like mentioning wrong IFSC codes, bank account nos etc. This has an impact on the refund process, as the refund is only through ECS and a wrong account number may lead to money being credited in someone else's account or no credit at all in case of mismatch of account details.
5. Do mention other income
In case of multiple income i.e. income from other sources like commission, or add on income as lottery earnings etc, it is important to mention the same while filing of taxes. Apart from the other income, it is also important to mention if there has been any gain from investments.
6. Not sending the ITR V
After filing of returns online, the process does not end there. It is also vital to ensure that the physical copy of the ITR V has been sent to the income tax department; also make sure that the copy is sent through registered post to the income tax department.
7. Reporting foreign assets
On account of changes in rules and regulations reporting foreign assets has become quite important. Thus missing out on this can land an investor in trouble; thus it is important to disclose all the foreign holdings/assets along with the tax filing.
8. Clubbing income
It is a common practice of investing in name of non-working spouse and minor children, however any income received from such investments will be clubbed in the hands of the earning member. Thus non-clubbing of such income will attract tax scrutiny.
9. No tax filing in case of TDS
Another wrong assumption among the taxpayers is that once the TDS has been done and the entire tax liability has been paid, there is no need of filing income. However, even though the tax amount has been paid it is important to file your taxes with the income tax department.
Illustration: Uttam Ghosh/Rediff.com
For more, click on the Red Button below to join Anil Rego for an online chat on 'All you want to know about filing tax returns' on Friday, July 8, between 2 pm and 3 pm.
Anil Rego is the founder and CEO of Right Horizons, an investment advisory and wealth management firm that focuses on providing financial solutions that are specific to customer needs.