Filing income tax returns can sometimes be a tricky affair for many people. Here are 5 common mistakes people usually make while filing their income tax returns.
Filing income tax returns has become relatively easier now. However, people often make some mistakes that lead to defective returns or problems at the time of claiming a tax refund.
Here are 5 common mistakes you must guard against while filing your income tax returns online:
Failing to mention all income sources
It’s important for taxpayers to report all kinds of incomes, whether taxable or exempt, while filing their tax returns. You shouldn’t think that just because an income is tax exempt, you don’t need to report it when filing your returns.
For instance, interest earned on Fixed Deposit or Savings Account balance, though exempt from taxes, must be reported when filing returns. Failing to mention all income sources in ITR (Income Tax Returns) is treated as an act of income concealment and may lead to trouble later.
You must be extra careful while mentioning your basic details like bank account number, email address, PAN (Permanent Account Number) etc. while filing your tax returns. Quoting a wrong PAN number, for instance, can lead to rejection of the return by the Income Tax Department.
Furthermore, your name and date of birth must also match with the details on your PAN card. Providing a working phone number and email address is important for the tax department too since they use these details to communicate with the taxpayers. Hence, ensure that you provide all such details correctly.
Using the wrong ITR form
It’s important that you use the correct ITR form while filing your tax returns. There are different ITR forms for different combinations or sources of income. For instance, if you only earn salary income, you must use the ITR1 form to file your returns, but if you also earn some capital gains from your investments alongside your salary income, you’ll need to use the ITR2 form.
An income tax return filed correctly using the wrong form is treated as defective by the Income Tax Department. You’ll need to rectify such defective returns later, which will only consume more of your time and effort.
Not checking the tax credits
Before you file your income tax returns online, you must make sure that you’ve gone through your Form 26AS and checked for any tax credits. This form consists of various incomes and their corresponding TDS (Tax Deducted at Source) details and also details related to self-assessment tax, advance tax etc. You can use all such tax credits for obtaining tax refund and/or for avoiding any additional tax payments.
Forgetting ITR verification
Please note that it isn’t enough to just e-file your tax returns. You must ensure that you’ve received the ITR-V form on your registered email address after making your ITR submission. In the event that a tax return is filed on the Internet, without providing your digital signature or Aadhaar number, it will need to be verified after the e-filing process.
This can be done in two ways – you may either send a signed physical copy of the ITR-V to the Central Processing Centre (CPC) of the tax department situated at Bengaluru, within 120 days of filing your returns, or you may e-verify your returns from within the comfort of your home or office.
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This post is an investor education initiative sponsored by ICICI Prudential Mutual Fund.