Introduction
Navigating the labyrinth of income tax filing often feels like a high-stakes game, where even the smallest misstep can lead to unwanted consequences. As the deadline for filing taxes approaches, steering clear of common mistakes becomes paramount. From selecting the right form to accurately reporting income sources, each detail holds the key to a smooth, trouble-free tax-filing experience.
List of Common Income Tax Filing Mistakes
With the deadline for filing tax returns looming, it’s crucial to steer clear of common mistakes that could potentially land you in trouble with the tax authorities. Let’s explore some prevalent missteps taxpayers often make and learn how to avoid them.
1. Choosing the Wrong Form
Selecting the appropriate ITR form is foundational. Using the wrong form can lead to processing issues or defect notices. Ensure you match your income sources with the correct form or consider using e-filing platforms that automate this selection process.
2. Misquoting the Assessment Year
Mentioning the wrong assessment year increases the risk of double taxation or penalties. For instance, for FY 2018-19, the corresponding AY should be 2019-20.
3. Providing Inaccurate Personal Information
Details like name, address, PAN, and bank particulars for refunds must align with your PAN records. Accurate information ensures timely refunds and smooth processing.
4. Not Disclosing Tax-Deducted Income
Even if tax has been deducted by employers or banks, filing a return is mandatory if your annual income exceeds Rs.2.5 lakh. Disclose deducted income and claim TDS credit in your return.
5. Ignoring Interest Income Reporting
Interest from savings and fixed deposits constitutes taxable income. Ensure reporting this in your return, considering deductions available under Section 80TTA/80TTB for savings account interest.
6. Omitting Other Sources of Income
All income sources, whether taxable or exempt, must be disclosed. Failure to report income from various sources can raise questions from tax authorities.
7. Manual Entry Errors
Entering details incorrectly in the ITR forms can lead to errors. Follow the specified format for dates and other information to prevent discrepancies.
8. Failure to Reconcile TDS
Verify Form 26AS against Form 16 to ensure accurate reflection of TDS. Mismatches might result in reduced refunds or additional taxes payable.
9. Handling Multiple Form 16s
If changing jobs led to multiple Form 16s, aggregate the incomes from all employers under the salary income section in your return.
10. Not Claiming HRA
Ensure submission of rent receipts to claim House Rent Allowance (HRA) benefits, considering the landlord’s PAN if necessary.
11. Misjudging Deductible Expenses
Understanding eligible deductions, such as investments or expenses up to Rs 1.5 lakh, is crucial. Lack of awareness can lead to missed deductions.
12. Missing Advance Tax Payments
Paying taxes before the due date prevents interest and penalties. Clear tax dues by March 31st to avoid unnecessary financial burdens.
13. Misconceptions About Donations
Verify donation receipts for accurate tax exemptions. Not all donations qualify for 100% exemption, and understanding these nuances is essential.
14. Incorrect Assumptions About NSC Interest
Interest earned on National Savings Certificates is taxable income and needs to be reported accordingly for deductions under Section 80C.
15. Delayed ITR V Dispatch
Verify and dispatch your ITR-V promptly after e-filing to initiate processing. Failure to do so within 120 days can stop the processing of your returns.
Conclusion
Filing income tax returns demands precision and attention to detail. By avoiding these common pitfalls, you can streamline the process and prevent complications, ensuring a smooth and hassle-free experience with tax authorities. Take the time to double-check your details and seek assistance if needed to navigate the tax-filing journey successfully.
At Smart Accountants, we specialize in seamless accounting solutions and automated tax services. From meticulous tax preparations to streamlining your financial records, let us be your guide through the maze of taxes. Contact us today for a stress-free tax season and discover the ease of smart accounting!
