ITR tips: 5 mistakes you should avoid while filing income tax returns
Filing income tax returns (ITR) can be a dreary process for most individuals, especially those who have a large number of investments.
A number of documents are involved in the process individuals often end up making mistakes that can complicate the process further.
Besides, there are cases where people deliberately pass on wrong information to the income tax department in order to claim an increased refund.
Such individuals are most likely to end up with a tax notice or a fine as the income tax department has implemented stricter rules to curb tax evasion.
Having said that, here are five mistakes that you should avoid while filing income tax:
Not reporting all income sources
If you do not report all your income sources while filing income tax return, the I-T department is likely to treat it as a violation of the Income Tax Act.
Surprisingly, this is the most widespread mistake when it comes to filing income tax return.
Most individuals have a number of income sources apart from salaries such as interest earned on bank savings account, fixed deposits (FDs), insurance and other savings schemes like PPF.
While 10 per cent TDS (tax deductible at source) applies to FDs, some of the other investments are tax-free.
However, you are required to report all your income sources, even those which are absolutely tax free. Not reporting these incomes can force the I-T department to send you a show cause notice.
In case you have recently changed your job, it is necessary to report income earned through both employers.
Tax filers should note that any income earned by a related minor through investments is also taxable at the same rate which applies to the parent. In such a scenario, the income earned by minor is clubbed with the parent’s income before computing the net taxable amount.
If you have any investments under your child’s name, do not forget to mention while filing tax returns.
Own more than 1 house? Don’t forget to declare it
If you own more than one house, then you are liable to pay tax on it. Not declaring such properties is the second-most common mistakes people make while filing tax returns.
No matter if the house is occupied by a tenant or by your extended relatives, you have to pay property tax on the same.
Never report falsified income source
While this may not be classified as a mistake, many fake tax professionals try to sway people into filing swelled returns to earn more tax benefits.
This will be viewed as a criminal offence by the tax department. You will not only receive a notice for inflation your income but a fine and jail term may also apply. Always avoid filing inflated returns and say no to tax professionals who give you such ideas.
Don’t pick the wrong ITR form
Another common mistake people make is selecting the wrong form. Whether you file online or offline, it is absolutely necessary to file details on the correct form.
There are a number of forms that are used by different professionals to file tax. For instance, a salaried individual usually files ITR1 form (salary below Rs 50 lakh/annum) while businesses use ITR-4. Always consult a tax professional to find out the form that you need to fill.
Do not provide incorrect personal details
Many people face issues with income tax returns filing due to wrong postal address and email address.
Since most of the communication with the tax department happens through post or email, it is absolutely important to provide accurate details.
A mistake in this aspect may lead to lack of communication and you could end up missing important notifications.
A number of documents are involved in the process individuals often end up making mistakes that can complicate the process further.
Besides, there are cases where people deliberately pass on wrong information to the income tax department in order to claim an increased refund.
Such individuals are most likely to end up with a tax notice or a fine as the income tax department has implemented stricter rules to curb tax evasion.
Having said that, here are five mistakes that you should avoid while filing income tax:
Not reporting all income sources
If you do not report all your income sources while filing income tax return, the I-T department is likely to treat it as a violation of the Income Tax Act.
Surprisingly, this is the most widespread mistake when it comes to filing income tax return.
Most individuals have a number of income sources apart from salaries such as interest earned on bank savings account, fixed deposits (FDs), insurance and other savings schemes like PPF.
While 10 per cent TDS (tax deductible at source) applies to FDs, some of the other investments are tax-free.
However, you are required to report all your income sources, even those which are absolutely tax free. Not reporting these incomes can force the I-T department to send you a show cause notice.
In case you have recently changed your job, it is necessary to report income earned through both employers.
Tax filers should note that any income earned by a related minor through investments is also taxable at the same rate which applies to the parent. In such a scenario, the income earned by minor is clubbed with the parent’s income before computing the net taxable amount.
If you have any investments under your child’s name, do not forget to mention while filing tax returns.
Own more than 1 house? Don’t forget to declare it
If you own more than one house, then you are liable to pay tax on it. Not declaring such properties is the second-most common mistakes people make while filing tax returns.
No matter if the house is occupied by a tenant or by your extended relatives, you have to pay property tax on the same.
Never report falsified income source
While this may not be classified as a mistake, many fake tax professionals try to sway people into filing swelled returns to earn more tax benefits.
This will be viewed as a criminal offence by the tax department. You will not only receive a notice for inflation your income but a fine and jail term may also apply. Always avoid filing inflated returns and say no to tax professionals who give you such ideas.
Don’t pick the wrong ITR form
Another common mistake people make is selecting the wrong form. Whether you file online or offline, it is absolutely necessary to file details on the correct form.
There are a number of forms that are used by different professionals to file tax. For instance, a salaried individual usually files ITR1 form (salary below Rs 50 lakh/annum) while businesses use ITR-4. Always consult a tax professional to find out the form that you need to fill.
Do not provide incorrect personal details
Many people face issues with income tax returns filing due to wrong postal address and email address.
Since most of the communication with the tax department happens through post or email, it is absolutely important to provide accurate details.
A mistake in this aspect may lead to lack of communication and you could end up missing important notifications.
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