As the ITR (Income Tax Return) filing date has again extended till 31st December 2020, the taxpayers are compiling their tax related documents and other relevant certificates and making their sacred rounds to the tax consultants office. But what if I tell you that you can file your own Income tax returns without making certain common repetitive mistakes. This would not only save your time in revising the return or even avoid receiving the tax notice.
Providing Basic Personal and Tax Details
Income Tax return contains the basic personal details like name, address, mobile number, date of birth, email id etc. and other important tax relevant details like PAN number, residential status, bank account details (especially account number and IFSC code- which are important since the refund gets credited to the account number mentioned by the taxpayer in the return based on IFSC code), etc.
If any taxpayer omits any of such important details or fill in wrong details, the impact of the same may vary from hurdle in communication (in case the taxpayer quotes wrong mobile number or address etc.) to severe consequences (for e.g. where the taxpayer fails to quote correct PAN).
Related Article : – Income tax return (ITR) filing deadline for 2019-20 extended
Selecting Wrong Return Forms
Depending upon the type of income earned and reported by the taxpayer, appropriate income tax return forms are to be selected for filing the income tax return. For e.g. there are different tax return forms for salary income, business income, and capital gains etc. If you earn salary income along with meager savings bank interest income, then you need to file ITR-1. However, if you earn income under the head business or profession, then you need to file ITR 3 and ITR4 as suitable.
If any taxpayer fails to select and submit the correct income tax return and appropriate return forms, then the assessing officer may even assess the return of income as invalid or void. This will convert your valid income tax return to invalid or defective return, which is almost equal to non-filing of return. Hence, to avoid such consequences, always select and fill in and submit the appropriate return forms.
Not Declaring Exempt Income
Most of the times, taxpayers fail to recognize the importance of recording or declaring the exempt income in the return of income. Exempt income is exempted from tax liability only if they are declared and reported in the return of income. For e.g. agricultural income is exempt but is used for determining the tax rate in case the income crosses prescribed threshold.
In such increased tax rate, agricultural income will still be exempt but other income will be taxed at such higher tax rate. Also for dividends on equity shares, it is exempt, however, reporting and declaring a dividend on the share is still mandatory since the threshold for taxability of dividends.
If any taxpayer fails to disclose or report the exempt or non-taxable income in the return of income, then it may be termed as concealment of income and accordingly action will be taken by issuing tax notice.
Related Article: – Know All About Deduction Under Section 80C
Not Submitting Proofs for Deductions and Exemptions
If the taxpayer omits or fails to submit evidence of amount invested in tax-saving instruments, then the deduction for such investment may or may not be allowed. For e.g. if the taxpayer fails to submit interest certificate for interest paid on housing loan, then he can claim the same later under section 80C at the time of online IT return submission.
Always ensure that you have submitted evidence of tax saving instruments like interest certificate, PPF investment, LIC premium receipts etc. to the employer before the prescribed cut-off date. This will help you avoid the last-minute rush and will also help ensure that you will claim each and every tax deduction. Thus, it is crucial to submit proofs for deductions and exemptions.
Tax Credit and Tax Payments
Most of the times, the taxpayers will receive the TDS certificates for each income earned (salary, interest etc.). However, there are cases, where you won’t receive the TDS certificate or receive it quite later after filing of income tax return. Sometimes mentioning incorrect details like incorrect TAN or incorrect assessment year etc. will also make you ineligible for claiming the tax credit.
Same thing is applicable in case of self-assessment tax and advance tax. If the taxpayer fails to fill in the details of tax challans through which such tax is paid or fills in incorrect challan details, then he may end up in not receiving the credit for the tax paid by him.
To avoid such scenario, one must always compare the form 26AS with the TDS certificates and tax challans. This will help you assess if any TDS or tax payment is not reflected on your PAN and you may ask for TDS return revision or enquire your bank for the same in case of tax payment challans.
Verification of Return
Even if underrated, this thing is most important to help you avoid the tax notice for non-filing or non- submission of tax return. It is mandatory to verify the tax return by sending the printed and signed copy of ITR-V to CPC or you also have an option for e-verification. E-verification is very simple and convenient as it can be done online without any need to send any hard copy of ITR-V. To avoid receiving notice of non-filing or non-submission of return of income, the return of income needs to be verified (by sending ITR-V by post to CPC, Bangalore) or e-verified online.