The introduction of online filing of Income-Tax returns by the I-T department has made filing returns a simple process. While one had to wait in long queues or take the help of a chartered accountant to file returns until a few years ago, today one can easily file returns on the Income-Tax portal.
However, with more and more people filing returns themselves, mistakes committed while filing returns are also on the rise.
Here are seven common mistakes that people commit while filing taxes.
Using the incorrect form: A common mistake that most people commit is using the wrong ITR form to file returns. Different forms are applicable for different assessees. Forms also differ depending on the income earned in the previous year. Use of incorrect forms can result in your returns being rejected. As the Income-Tax department could change the applicability of the forms every year, it is useful to check before filing the returns or to take the help of a chartered accountant.
Error in Form 16 reporting and payment: This is another very common mistake committed while filing returns. When an individual changes job in the middle of the financial year, both employers may give him the benefit of minimum tax exemption. This will be reflected in the Form 16 issued by both the employers; however, the individual is eligible to claim exemption only once. This results in a lower amount being deducted as tax payment. An individual is required to pay the shortfall as taxes while filing the returns. However, most people ignore this, thus paying lower taxes to the government.
Verification of TDS with Form 26AS: There are cases where TDS is deducted other than on salary income. Details of all such deductions are available in Form 26AS. An individual should reconcile his income with this and pay the shortfall as taxes. Excess TDS that was deducted can be claimed as a refund. It is important to reconcile your records with Form 26AS before filing returns in order to avoid any mistakes in payment of taxes.
Providing incorrect details in ITR: The Income Tax department largely goes by the details you provide in your ITR form. It is, therefore, critical that you fill in the particulars correctly. An important detail is the bank account information, which is vital if you are claiming for a refund. Providing incorrect bank account details will result in a failure in the refund process. Providing the correct email ID and mobile number is also critical, as this is how the I-T department corresponds with you. If you are using a third party to file your returns, make sure to double-check the details provided before you sign off.
Not reporting exempt income: There are many income categories that are not subject to tax. However, this does not mean that you do not declare them in your returns. Some examples of such income heads include dividend income, interest from Public Provident Fund (PPF) and tax-free bonds, and interest from savings accounts up to Rs 10,000 in a year. Often, people do not report this income thinking that this is not necessary, as there is no tax liability on them.
Using the incorrect tax slab for certain income heads: Sometimes tax is deducted at a standard rate from income though tax liability is actually based on your income tax slab. A good example of this is the tax on fixed deposit interest. Banks usually deduct 10 per cent of income as taxes and remit the remaining to the individual. However, if the individual falls in the higher tax slab, say 30 per cent, then he or she will have to pay the remaining 20 per cent as taxes. However, many people forget to take note of this fact and under-pay taxes.
Sending the ITRV acknowledgement to the Income-Tax department: If you have a digital signature, then uploading the income tax returns on the e-filing website is the end of the tax filing process. However, if you do not have a digital signature, then you must take a printout of the ITRV acknowledgement, sign it, and dispatch it to the IT department within 120 days of filing the return. Many people forget to send the ITR form in time to the department. From assessment year 2015-16 onwards, this process need not be done if you can e-verify the returns by any of the methods specified by the Income Tax department.
Filing returns online is easy and can save a lot of time and money. So, do keep the above points in mind to ensure a hassle-free experience.
Illustration: Uttam Ghosh/Rediff.com
BankBazaar.com is a marketplace where you can compare and apply online for loans to meet all your personal loan, home loan, car loan and credit card needs from India's leading banks and NBFCs.