General income tax returns filing mistakes


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General income tax returns filing mistakes

  1. 1. INDIANTAXUPDATES.COM Common Income TaxReturns Filing Mistakes13 Unlucky Mistakes and How to avoid them AUTHORED BY SANYAM JAIN
  2. 2. Income Tax Returns Filing MistakesThe attention we give to playing Angry Birds is not the same we give the screenwhile filing out income tax returns. Tax payers wait for the deadline to file ITR andeventually file it in haste, because of which mistakes are bound to occur.Here are most common mistakes which should be avoided while filing your ITR:1. Selecting Wrong ITR FormThe most common mistake which an assessee commits is choosing the wrongform for filing income tax return. Various Income Tax return forms are notified bythe IT department for filing income tax return.Selecting a correct form is very essential for proper filing of income tax return.  ITR 1 (Sahaj): To be filled up by individuals with salary, pension, rental income from one property, tax-free capital gains and income from interest.  ITR 2: To be filled by individual and HUFs with salary, pension, rental income from more than one property, taxable capital gains, income from interest and foreign assets.  ITR 3: To be filled by partners in a firm with interest, salary, bonus, commission, capital gains, more than one property.  ITR 4: To be filled up by individuals and HUFs with income from business / profession with gross receipts more than Rs. 60 Lakhs a year. (If gross receipts are less than Rs. 60 Lakhs, but the income is less than 8% of gross receipts, still ITR 4 to be used).  ITR 4S (Sugam): To be filled up by individuals and HUFs with income from business / profession and gross receipts upto Rs. 60 Lakhs a year.  ITR V: Remember this is “V” and not 5. This is an acknowledgment form and is to be filled by all the above mentioned Page 2
  3. 3. Also, make sure that you upload the form as per the correct assessment year (AY).2. Not disclosing all Incomes (don’t ignore or leave any)While most salaried taxpayers seek to disclose only their salary income, it isimportant to report income for other heads, such as savings bank account income(the deduction up to R10,000 is only applicable from FY13).Even though long-term capital gains and dividend from equity, Mutual Funds andlisted securities are not taxable, they form a part of your income from othersources and you need to provide their details in the return form.If you own more than one house, you are liable to pay a certain amount as tax,even if you have not earned any income from it or if it is unoccupied.3. Entering Wrong Page 3
  4. 4.  PAN Number: You miss filling in one number or character of your permanent account number (PAN) and the form cannot be processed. Besides, you could be fined R10,000 for an incorrect entry.  TAN number: In respect of tax deducted at source (TDS), it is mandatorily required to furnish the TAN no. of the deductor. If the TAN no. of the employer is not wrongly entered then you will not get the credit of your tax deducted.  Status: Tax slabs are impacted depending on if you are a resident/non- resident individual or male/female, so calculate your taxes based on the applicable slab rates and special rates if applicable.  Bank Details: "Note that in case of e-filing of returns, the furnishing of bank account particulars is mandatory even if no refund is due. In case of refund, it is advisable to go for e-filing of returns to ensure faster processing," says Suresh Surana, founder, RSM Astute Consulting.  Jurisdiction: If the taxpayer provides wrong jurisdiction which is obtained from the Income Tax site through the PAN of the assessee then delay is caused in processing of income tax returns or your return may be rejected by the Department.  Other details like Email Address, MICR code, address for communication, phone number etc.4. Not Signing the Form: a. Not Sign at all: Signing on tax return is a vital requirement to be undertaken by an assessee. Generally, assessees are in a hurry to file income tax return and they forget to sign & submit the ITR in case of manual filing and ITR V in case of online filing of income tax return without DSC. This may lead to rejection of the ITR Page 4
  5. 5. b. Signing a blank form: In case you are hiring an agent to file returns on your behalf, kindly make sure to go through the form after the agent has filled it. Signing a blank form and leaving it completely on the agent is not a recommended option. Even a typing error could spell trouble for you.5. Ignore Multiple Form 16:If you’ve changed jobs in the middle of a fiscal year, ensure that you collect Form16s from both employers. If you have not shown your savings with the previousemployer to the present employer, there is a chance of paying extra tax,especially if you are in the high income bracket.6. Not Verify TDS with Form 26ASDo check the TDS and advance tax credit available against your PAN in your 26ASon the income tax website. Should your tax computation lead to a tax liabilityover and above your TDS and advance tax credit available, ensure promptpayment along with applicable interest.7. Not Recheck DeductionsMany individuals include ‘Employer’s Contribution’ to PF also under Section 80C.Remember, it is only the ‘Employee’s Contribution’ that qualifies for Section 80C.Another common mistake is that some people provide the entire home loan EMIamount under Section 80C or 24B, while the correct way is to put the principalamount under Section 80C and the interest amount under Section 24B. There aresome other lesser known deductions like Section 80E, 80G, 80DD etc. which needto be mentioned in your return form.8. Ignoring Reversal of Deductions:If you sell your house within five years of getting its possession, the deductionsavailed on the home loan are reversed. “Any installment or part payment ofamount due under self-financing schemes is allowed as deduction under section80C. However, if you sell the house within five years of getting possession, all Page 5
  6. 6. deductions claimed on this house would be deemed to be income in this year andyou need to pay tax on it,” said Sharma.9. Attaching supporting documents with ITR-VThe income tax departments e-filing website clearly states that no annexure,covering letter or pre-stamped envelopes is to be sent along with ITR-V (ITR-Verification, or acknowledgement, form). "No supporting documents are to beattached to the tax return; these are to be furnished only when called for by thetax office," says Srinivasan.10. Filing Delayed ITRDelayed ITRs cannot be revised later, even if you realize some mistake. Filing ontime becomes extremely important for people having tax losses, otherwise thebenefit to carry forward these losses to offset future income is lost.11. Not hold copy of the ReturnA copy of Income tax return and Acknowledgement should be maintained by youwho would be helpful in ensuring rectification of mistakes and will be helpfulduring audit process, if any, being conducted by the department in the nearfuture.12. Forgets sending e-filing acknowledgementYou should remember to take a printout of ITR V, sign it and send it to the IncomeTax Department’s Bangalore office within 120 days. Unless you send theacknowledgement, your E-filing is not treated as complete. Another thing toremember here is that ITR V is to be sent by normal post or speed post (and notthrough courier).13. No filing at allFiling tax returns is in your own interest. Tax filing helps you in availing any kind ofloan, visa and immigration processing, income proof / net worth certification Page 6
  7. 7. even applying for high Life Insurance Cover. So, just avoid this biggest mistake ofall – simply not filing a return.Suggestion:We suggest you take the e-filing route through tax portals; these have softwarethat prompts you to correct common mistakes. Some portals simply ask you for ascanned copy of Form 16, Form 16A, and copies of income from other sources;the software detects the data and fills the form automatically.Final Words:The importance of filing correct and accurate returns cannot be any lessemphasized. Neglecting to pay attention to details can end up making taxes evenmore costly or delays in refund. While, some of these mistakes would end up inyou getting a notice from the tax authorities, others would expose you to risks ofheavy penalties and punishments.Disclaimer:The above data/information has been collected from various sources andcompiled in a way to enhance the knowledge of the Page 7