7 Mistakes to Avoid While Filing Income Tax Return - Motilal Oswal
7 Mistakes to Avoid While Filing Income Tax Return - Motilal Oswal

7 Mistakes to Avoid While Filing Income Tax Return

The ITR return filing is not just your duty but it is also your duty to file these returns on time. Today the return preparation and filing process has been substantially simplified and hence it can be done through manual intervention alone. The filing process is entirely online and you can complete the entire process in less than an hour if you have all your documents in place. However, this is a process where people do make mistakes since they do not read the instructions and the process flow properly. Let us understand the coming ITR filing errors and the common mistakes to avoid while filing income tax returns. A quick understanding of some common mistakes will go a long way in making your job easier and your refunds smoother. Returns for the completed financial year have to be filed by July 31st. The government often extends this deadline by a month but you must ideally use July 31st as the cut off date and file your returns well before the cut off date. Here are some common mistakes we tend to commit in ITR return filing.

 

1.  I have paid my taxes, so why do I need to file my returns?

This is a common misconception that most people have. Paying taxes has to be completed by 31st of Marcy. You get four months after that to file your returns. That is enough time to get your Form 16 from your employers and vendors and the Form 26AS downloaded from the website. The rule is that if your taxable income is more than Rs.5.00 lakhs then you are legally obliged to file your returns. Failure to file your tax returns on time not only invites penal action but also results in a mandatory penalty of Rs.5000 to be paid to the Income Tax Department.

 

It is mandatory to file your returns electronically. For certain classes of assessees the filing of returns in physical form is permitted. But it is better to file returns online for the advantages that it proffers. There are some exceptions to the filing of returns. If your age is 80 years or more during the year of income or if your income during the previous year does not exceed Rs. 5 lakh and you do not intend to claim any refund then tax filing is not required. Even if your income is below Rs.5 lakh and even if you are claiming a small refund then filing is mandatory. You need to file returns and also file it on time. Dot wait till the last date as the pressure to file normally creates problems in server access.

 

2.  You may have selected the wrong ITR form; and it is a common error

Income Tax department has issued various ITR forms for different kind of tax payers. Please read the detailed documentation on the website to decide which form you must use. You can also consult with your auditor or chartered accountant if in doubt. For individuals, there are 4 ITR forms meant for different filings. A wrong ITR form used will lead to rejection of the return filed. If you file on time and use the wrong form it will be considered to be an invalid return and you will be required to file the returns again along with the penalty payable to the IT department.

 

3.  Not writing the proper assessment and financial years

Before starting off on your returns, you need to be clear on the concept of financial years and assessment years. The year for tax purposes in India extends from April 01st to March 31st. The income that you earned between April 01st 2017 and March 31st 2018 will be considered as the income for the financial year (previous year) 2017-18. This will correspond to the assessment year 2018-19 and the returns in this case will have to be filed by July 31st 2018 or any other data that the IT department may announce from time to time. Normally you are required to put in the assessment year in the slot and if that is wrongly entered then your form can be rejected. Make it a point to cross verify these points.

 

4.  Incomplete information or PAN card not mapped to Aadhar

For smooth processing your ITR and a timely refund, you should provide correct information about your name, address, bank account number, IFSC code, and Aadhaar, PAN, and Assets details. "It is important to register the correct email ID and mobile number to the account as the Electronic Verification Code (EVC) will be sent to these modes. Apart from your main bank account, you also have to furnish information on all the bank accounts that you hold with the IFSC codes and the account numbers. This is in contrast to the earlier practice, which required only bank account details in which you wanted the refund, now you have to provide the details of all your bank accounts while filing your ITR.

 

5.  Missing out disclosure of income from other sources

A common misconception is that one does not have to disclose dividend income or interest income of small amounts as they are tax-free. Even if an income is tax free it has to be compulsorily disclosed in the IT returns. If you fail to provide income from all sources, your ITR is incomplete and may lead to revision at later stage or scrutiny by the income tax officials. More importantly, don’t miss out on any income from foreign sources as the IT department and the ED can take a negative view on such practices. Remember, that all your incomes are tracked through your PAN and Aadhar so you as well make full disclosure.

 

6.  Don’t ever make the mistake of not disclosing foreign assets, however small
Government has been very strict on anti-money laundering measures and disclosure of all foreign assets falls under this. To avoid being on the wrong side of the law you need to make sure that you have updated all such details in your ITR.
 
7.  Make it a point to cross check the returns with Form 26 AS
The Form 26 AS shows you the actual tax that has been deducted and deposited into the government account. Your employer may have deducted TDS but may not have deposited the tax with the government. Your client may have deducted TDS at 10% but may not have deposited it. A verification of Form 26 AS from the Income Tax website tells you exactly how much of the tax deducted is actually deposited and paid to the government. This is the most authentic document for your purposes.
 

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