Some mistakes committed by taxpayer while filing Income-tax return are ignorable while some may have significant impact on your taxability.
Here are some of the common mistakes that should not be ignored :
- Incomplete or wrong personal details: It is necessary that taxpayer should disclose information such as PAN, Date of birth, Gender, Residential status etc. properly because wrong details entered may change the applicability of the Income-tax provisions and change the tax liability too. Many times taxpayers unintentionally submit wrong details about address, e-mail address or PAN. These details are required to validate the returns on website of Income-tax department. Income-tax department fails to deliver any notices or documents to you if you provide wrong address. It is always advisable to update the details with the department as and when changed.
- Choosing Wrong ITR Form: The Income-tax department has introduced different Income-tax Forms for different classes of return filers, to ensure that small taxpayers do not have to fill up complex Income-tax Forms. However, taxpayer may get confused in selecting an appropriate ITR Form according to his various sources of income during the year. ITR Form might not be same for every year, it may change as per income for each financial year. Filing incorrect ITR Form may make the return defective and the Income-tax department may reject such defective returns.
- Wrong residential status: Residential status of assessee determines the provisions applicable to him. Wrong status shall also make the income-tax return defective.
- Bank details: Bank details provided plays a vital role in case of refunds. Taxpayer is required to provide details such as Bank name, IFCS code, A/c. No and type of A/c. in his return, if these details are wrongly entered; refunds shall not be credited in proper A/c. Further, process of refund reissue request is time consuming.
- Verify TDS from Form 26AS– Entering the TDS amount as per Form 16/ Form 16A cannot ensure that taxpayer will get complete credit for Tax deducted at source. One should also refer Form 26AS (which can be downloaded from Return Filers Login at Income-tax department website www.incometaxindiaefiling.gov.in) for correct information about TDS deducted and deposited. It is advised to verify the amounts provided in Form 26AS as with TDS certificate.
- Losses under any head, if any– If assessee is having any losses from previous years’, he should carry it forward to the current year & set-off the same as per the appropriate provisions. One should not miss to carry forward balance loss, if any to the next year.
- Checkout 80C deductions: Section 80C comprises of many deductions such as LIC, PPF contribution, provident fund, Investment in Mutual Funds, FDs, etc. Generally, we tend to consider these popular items of deductions while filing the return. However, many times assessee forgets to claim deduction for housing loan repayment, stamp duty, payment of tuition fees, etc which are also eligible deductions.
- Donations: If you have contributed to any charitable trust, make sure you have claimed deduction U/s. 80G. Taxpayers are required to provide PAN of donee trust to claim the deduction.
- Failing to send ITR-V: One may think that process of return filing gets completed once he files return online. However, after filing online return, a signed copy of ITR-V acknowledgement must be sent to Income-Tax CPC, Bangalore within 120 days of filing date. Otherwise department treats as no return has been filed by taxpayer for that F.Y.
- Filing PAYABLE return: As per the recent amendments in the Income-tax Act, 1961, if assessee files a payable return, the return shall be treated as “defective return”. Income-tax Department considers such defective return as invalid. One should ensure that he has paid all the taxes before filing his return.
- Wrong computation: This may happen in case of filing and submission of paper returns. Assessee may commit arithmetical errors in computing incomes such as totalling errors which makes the return defective. It is advisable to verify the computation of return before submission.
- Multiple Form 16s: In case taxpayer has received salary from more than one employer during a financial year, he will receive more than 1 Form 16. In this case, details of each Form 16 shall be entered separately under the head Salary.
- Concealing any source of Income: Many times, taxpayer assumes that since tax has already been deducted while receiving FDR interest, there is no need to disclose the details of such income and TDS while filing the return. However, details of all the sources of incomes are required to be deducted even if TDS is deducted or not.
- Consideration of Amendments: Many taxpayers are not aware about changes that has been made by Government in the Income-tax Act every year. Income-tax department also makes necessary changes in ITR forms to synchronise the forms with taxation laws and recent developments. These changes have impact on incomes and taxes. Ignoring such changes may result in defective return, one must avoid it.
- Reporting exempt Income: In case of exempt incomes like dividend or agricultural income etc., taxpayer may think that since income is not taxable, it is not required to be disclosed. However, Income-tax department has provided a separate schedule to enter exempt incomes in all ITR forms. One should ensure that all the exempt incomes have been properly disclosed.
- Deemed Let out property: In case taxpayer owns more than one house property, any rental Income from such House Property is Taxable under the head Income from House Property. In case any House Property is not let out during the financial year, even then the taxpayer should determine its Fair Rent Value and offer it for taxation as Income from House Property.
- Relief from tax: Taxpayer can claim tax relief on Salary Income received in Current Financial Year which relates to services rendered in previous years’. In case taxpayer is eligible for such relief, the same could be claimed under section 89 of Income-tax Act. Relief amount is the excess amount of tax payable on arrears received in current financial year. It is calculated as the difference between tax on arrears as per current financial year minus tax on arrears as per tax computation of any previous financial year to which such arrears pertains.
- DTAA: Global income is taxable. Taxpayer might have received incomes from any source from foreign country on which tax has already been deducted by that country. Such income is also taxable in India. However, relief U/s. 90, 90A of Income tax Act, 1961 is available to avoid double taxation of the same income. Taxpayer should ensure that relief is computed as per the provisions of the Act.