Income Tax laws have created many innocent criminals. Your neighbour next door may be a proud tax payer: he prepares his ITR well in advance, makes sure all his sources of income are clearly mentioned and submits it to the Income Tax department without delay. And in a few months you see him frustrated because he received intimation for not reporting his full income.
Your neighbour is honest about his taxes. What went wrong?
A survey conducted on salaried employees who filed their returns from TaxSpanner concluded that 96% employees forgot to document any income earned from other sources, say, interest accrued from a savings account. Here are the 10 common reasons where you must cross-check before handing over your income tax return (as published in ET Wealth on Feb 13, 2012):
- Ignoring income from investment in the name of spouse, kids.
- Ending life insurance policy before 3 years.
- Not including interest income in your tax return.
- Selling a house bought on loan within five years.
- Not including ornaments in wealth tax.
- Receiving gifts and cash from persons other than blood relatives.
- Not paying wealth tax on second house.
- Both spouses claiming tax benefit on same expenses.
- Withdrawing PF within five years of joining a company.
- Taking benefit of basic exemption limit twice in a year.