8 common mistakes while filing your tax returns and how to avoid them?
It's the time of the year when the words Income Tax Returns are on everyone's minds. That's right it's time to file your tax returns. This article details about the common mistakes made by tax payers in their filings and how to avoid it.
1. Selecting the right ITR form
There 7 types of forms based on the type of income a person has. For example, type 1 is for only a salaried person while type 2 is for a person with salary as well as capital gains. One needs to be careful in choosing which form to fill. Choose the right form for filing your tax to avoid rejection of your returns by the income tax department.
2. Furnishing incorrect personal details
Many people will make mistakes while filling out forms when it comes to their personal details like PAN card number, email id, bank account number, bank IFSC code. These mistakes especially mismatch with your PAN card number will lead to rejection of your tax filings as there is a mismatch with the existing data.
3. Mention all sources of income
Do not forget to mention the non-taxable income. It is best to mention all sources of income as some might contain interest earned on savings accounts, fixed deposits or earning through selling shares or mutual fund units. If not mentioned these earnings will be considered as concealment of income and liable to penalties.
4. Not claiming deductions under the right sections
Claim your deductions under the right section. For example, the principal paid on home loans comes under 80C while the interest paid comes under section 24. One must take care to not interchange the declarations. The deductions will vary and you might end up paying more tax.
5. Failure to check form 26AS
Form 26AS includes all your income details, Tax Deducted at Source (TDS), advance tax paid, self-assessment tax etc. It is very important that you verify it to avoid any discrepancies between your income and tax details. Cross-check between Form 16 and Form 26AS.
6. Failure to mention multiple properties
Only your first property is eligible for deductions i.e. whether occupied or not, if you have multiple properties you can claim refunds for only 1 property all others will be deemed let out and taxed under respective municipal rates. If not mentioned you will be accused of violation of Income Tax Act for concealment of income.
7. Paying advance tax and self-assessment tax
It is advisable to pay advance tax before the end of the financial year. It is normal to have income which cannot be subjected under TDS. Calculate the tax liable and pay it before 31st March. If not done a person can be penalized at 1% every month from April 1st of the next financial year.
8. Verify ITR-V
Many people consider their job done once they file income tax online. But the process truly ends only after the acknowledgement (ITR-V) which the income tax department will send to your registered email id to Centralized Processing Centre(CPC) Bangalore. This step is not required for those who have e-filed your tax returns with a digitized signature. The ITR-V must be sent via speed post within 120 days of e-filing. Also keep a track of the post and confirm if CPC Bangalore has received your post by calling their toll-free number 1800-425-2229.
If you follow the above-mentioned points you can file your Income Tax returns without errors and get maximum benefits or refunds without any delays and rejections from the IT department. However, it is best to consult a tax expert as there are lots of sections in the tax form which you may not be aware of and end up paying more tax than you are legally required to.