Common Mistakes while filing Income Tax Return

Here are the most common mistakes taxpayers make while filing Income Tax Return (ITR):

  1. Not filing returns: Any individual earning above Rs.2.5 lakh per annum is required to file tax returns. Tax returns are required in case you are looking for a loan or applying a visa application.
  2. Not matching ITR data with income tax department’s database
    • Not matching ITR data with Form 26AS: Verification of ITR with the IT department’s database is important because all the transactions are scrutinized by the department. Any mismatch will surely lead to a notice.
    • Not matching DOB/Name in ITR with PAN: In many cases the e-filing gets failed because the name and DOB mentioned in ITR is different than in PAN database.
    • Not linking Aadhaar with PAN: From July 1, 2017, the linkage of Aadhar number with ITR has become mandatory. ITR may fail if the Aadhaar is not mentioned in it. However, this is not valid for those who don’t have Aadhaar yet.
  3. Not submitting or e-verifying ITR-V: The one-page acknowledgment you get after e-filing is called ITR-V. E-Verifying or Sending the signed copy of ITR-V by post within 120 days of e-filing is must. Otherwise, the return will be deemed to be not filed. Don’t wait anymore, Start e-Filing Now!
  4. Not reporting bank’s interest income: It is a common misconception that either the interest income from savings or fixed deposit accounts is not taxable or that tax has already been deducted on interest income by bank. In fact, banks only deduct 10% TDS on interest income, whereas you may be in the 30% tax slab. It will lead to tax demand notice.
  5. Not reporting exempt income: Several incomes such as dividends and long-term capital gains on listed securities are exempt from tax. However, you must report these in your tax return since their details are provided to the IT department by companies and brokerage firms.
  6. Incorrect assessment year while paying self assessment tax online: Assessment year is always one year ahead of the financial year. For FY 2016-17 tax returns, the assessment year is AY 2017-18.
  7. Not reporting foreign assets: You must report any asset that you may have outside IndiaThe income on foreign assets should also be declared by resident Indians. In case of non residents, the declaration of foreign assets and income is not required. Let our tax experts help you declare your foreign assets/income and e-file your return.
  8. Not declaring all bank account numbers: From AY 2015-16 all operative bank accounts are mandatory to be disclosed in ITR, but the taxpayers are not doing so. Only one bank account number is being declared as per past practice.
  9. Difference in calculation of Tax or Interest under 234A, 234B or 234C: Taxpayers are not very familiar with tax laws on advance tax and interest on delayed tax payment. Advance tax on capital gain and lottery income is especially being delayed, leading to demand notice from ITD later.
  10. Declaring income from one employer only: In case of job change during the FY, employees get multiple Form 16. Hence they need to declare all of these Form 16 in ITR and pay the differential tax amount (if any). Generally, employees do not inform the previous employer income at the time of joining the new employment. Due to this, they get basic exemption and chapter VI deductions twice in the same FY. Therefore, at the time of filing the return they get additional tax due. Few taxpayers decide not to disclose income from all employers assuming that ITD would not catch them. However, Form 26AS has details of all employers, leading to demand notice with interest penalty. Avail our tax expert assisted e-filing package to help you save taxes.
  11. Not declaring spouse/minor income: In case any asset/money is given to spouse or minor children, the income arising from the same i.e. interest on FD or rent from property should be included in your own return.
  12. Not declaring the deemed rent on vacant house: There are many taxpayers, esp. those who are 50 years of age and above, who have multiple house property but fail to declare deemed rent in their tax return. ITD has not yet been able to catch these defaulters through integrating the property ownership data from registrar of properties. However, there has been a latest announcement to link the properties with Aadhaar by 14th August, 2017.
  13. Not claiming the HRA exemption from previous employer: In case of job change, the employees generally loose the HRA exemption from first employer because the rent receipts get submitted in the month of December in most of the cases. The new employer is not empowered to accept previous rent receipts for the period when employee was working with different company. Therefore, the HRA exemption from previous employer should be claimed in the tax return so that the refund of tax can be claimed lawfully. Avail our tax expert assisted e-filing package to help you save taxes.
  14. Not giving complete and correct address and bank details: Mistakes in address, bank details do not affect processing of ITR but cause mis-delivery or non-delivery of communication or rejection of refund credit to taxpayer’s bank account.
  15. Depositing tax challan in different AY: In case of self assessment tax payment, the taxpayers are generally not clear about the difference between FY and AY. Hence, at the time of depositing the tax challan it has been noticed the AY is selected as FY which leads to demand notice later. For example, if the self assessment tax for FY 2016-17 is to be paid then AY 2017-18 should be selected. However, many taxpayer end up selecting AY 2016-17 by mistake.


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