The month of July is about to end and 31st is already approaching. So, everyone needs to gear themselves for filing ITR. Filing an ITR requires filling up too much of information. Filing an ITR with so many information all at once can become a difficult task thereby leading to mistakes.
Listed below are a few common mistakes you should avoid while filing an ITR
Failing to file on time
Often it happens that people do not file the ITR in time. This is common and you can do it later. However, you may need to pay an additional charge for filing the ITR if you are late
Kumar from PwC India said, “If you miss the filing deadline, you can still file the return before end of year. Return for the financial year 2017-18 can be filed within March 31, 2019 if you miss the deadline.”
In case you have missed out on filing the ITR, you will need to pay a penalty of Rs5000 before 31st December, 2018. However, you will need to pay penalty of Rs10,000 if the deadline is extended after 31st December.
Picking the incorrect year for return
You have to be very specific about the year you want your return. People often get confused and file in the wrong year for return. The year for finances should be considered as the previous year. The following year in which income is to be evaluated and return is to be given is termed as assessment year. In the present scenario, the previous year is 2017-18 while the assessment year is 2018-19.
Not filing the ITR
If your income meets the needs of filing ITR, you will need to file it. Partner and Leader of personal Tax, PwC India, Kuldip Kumar said, “Not filing of return of income may lead to levy of penalty where there is any tax payable and in extreme cases, tax authorities may even invoke prosecution provisions u/s 276CC of the Act subject to satisfaction of conditions contained therein.”
If your total income is valid enough to be taxed, then you should be filing the ITR. The tax upon the total income is estimated as the income prior to the application of the different exemptions, as stated under Income Tax Act. In the financial year of 2017-18, people below the age of 60years and having income of less than 2.5years were not considered to be legible for paying tax. The returns should be filed electronically.
In a few cases, paper returns can be filed. ITR1 and ITR4 are legible for filing the paper returns only if you are above the age of 80 years, and your total income isn’t above 5laks or incase you do not want any refund.
Choosing the wrong ITR form
There are different kinds of income tax forms issued for the payers by the Income Tax Department. Every individual has to fill up 4 different forms meant for different purposes. If you fill up a wrong ITR form, the issue can become complicated. Before you start with your ITR form process, make sure that you analyze the form thoroughly and fill the correct form. The forms come with instructions, so you can choose them accordingly. If you are not sure about the process, you can take the help of a professional.
Filing incorrect and incomplete KYC
For the proper ITR file and to get refund in time, you should be filing all your forms with the right KYC documents. All your details such as IFSC code, PAN, name, address and many more should be in the right order.
Founder and CEO of ClearTax, Archit Gupta said, “It is important to register the correct email ID and mobile number to the account as the Electronic Verification Code (EVC) will be sent to these modes. E-verification is an important step to successfully file a return. Apart from the EVC all important details will be sent to the registered modes of communication.”
Not revealing the foreign assets
Government has strict rules regarding anti-money laundering, and for foreign assets under this measure. If you have any foreign assets, you should clearly mention about them when you are filing an ITR. Taranpreet Singh of TASS advisory further said, “Don’t forget to report the foreign assets, this includes all the foreign bank accounts whether operational or not. A taxpayer also must report bank accounts where the assessee merely has a signing authority.”
Not mentioning about incomes from any previous employer
Often it happens that people miss out on mentioning about income from a previous lawyer. However, despite mentioning your current employer, you should also mention your previous employer. This will be beneficial for avoiding any future complications. Singh added, “While filing the income tax return, it is important to consider and declare income from the previous employer, if any. It is observed that in some instances, employees generally forget to report their previous employer salary on their tax returns resulting in income mismatch notices being received at a later stage.”
No disclosure of income from various sources
One of the key features for avoiding any kind of complication is to maintain the details about your income from the varied sources. Incase you fail to do so, your ITR will be considered incomplete and you may need to make a thorough revision of it.
Singh said, “It is important to review your interest income from various sources such as FDR’s, recurring deposits, bonds and saving bank interest. It is a common error that people claim deduction under section 80TTA for Rs. 10,000/- from any form of interest income, whereas the deduction is specific to interest earned from saving bank account only.”
You can take the help of forms like 26AS and 16, in order to match the deductions with those of the filings. You can take the help of them and look out for the TDS deductions. Sameer Arora, Managing Partner of ATMMS LLP added, “Along with salary income they should disclose the interest income on their investment and any other income they have. Since non-disclosure of Income shall lead to additional penalty. They should match the salary and TDA figure with 26 AS vis-a-vis Form 16 before filing.
Income from interest
Many taxpayers tend to not consider their income from bank fixed deposits (FD) or Recurring deposits (RD). However, this is a common mistake which needs to be corrected. A taxpayer must include all his FDs, RDs, infrastructure bonds in the IT file. The interest on the saving bank deposit is safeguarded by the exemption mentioned under 80TTA. However, other source of income such “5-year tax saving bank FDs” are considered to be legible for the payment of the taxes. The taxpayer must also include information regarding PPF and tax-free bonds. Despite being tax-free the mention of all these details is a must in when filing your return.
Income of minor children and spouse
Many taxpayers often spend on behalf of their children and spouse. Mentioning these details in the documents are very essential. Whenever you are filing any return for yourself, you should mention about the income you have been receiving from the end of your minor child and wife. These are also considered to be your incomes. All these details are to be mentioned in your ITR form. If not, it may be considered to be incomplete.
Even a small mistake in your ITR file can lead to a big blunder. Make sure that you fill up your ITR file correctly without any mistake. This will help you stay away from the mistakes.