Guest post from HrBlock.
Mistakes are inevitable and make us more human because without them we would not be able to differentiate between right and wrong, good and bad and so on. However, some mistakes can cost you a lot more than what you are eventually, begrudgingly, willing to part with.
Making errors while e-filing your tax return is one such situation where one wrong information can lead you to pay excess tax and even get a notice from the Income Tax Department. Find out here if you have been making these 10 common tax filing errors and know how to avoid them.
- Not Filing Tax Returns
If your income reaches more than the threshold limit of Rs 2.5 lakhs in a financial year, you need to file your tax return. You must calculate this amount before you give effect to deductions under chapter VIA, exemptions under section 10 (38), section 10A or section 10B or section 10BA. This may be a NIL return considering you get tax rebates up to Rs 2,500 for income up to Rs 3,50,000, but nevertheless filing a return is always a good financial practice.
- Not checking the Form 16 with Form 26AS
Form 16 may at times miss out on reflecting the taxes deducted from your income other than salary. In such a case it is always a good idea to match the TDS deductions on Form 16 and Form 26AS. Any mismatch in the details can be corrected when you file your returns. This will make sure that your tax return is not defective.
- Choosing the Wrong ITR Form
This year the applicability of tax return forms has changed and accordingly you must choose the correct ITR form for yourself. ITR 1 and 2 are mostly applicable to salaried individuals and have some additional fields to be filled in too. If you file the wrong ITR form, your return can be treated as defective. Therefore, choose the correct form for filing your tax returns.
- Furnishing Wrong Personal Details
One of the silliest but also the most common error that can make you miss out on your tax refunds is mentioning incorrect personal details like address and bank account number on your ITR form. Mentioning your accurate address as per the PAN card is very important. You also must ensure that the bank account number is mentioned accurately since your refund will be credited directly to this account.
- Not reporting Interest Income
Interest income earned on a savings account is exempted from tax u/s 80TTA, but the interest incomes earned on fixed and recurring deposits are taxable. However, reporting both these on your tax return is very important. Hence make sure you include these amounts under the head ‘Income from Other Sources’.
A recent amendment in the Finance Act 2018 allows interest on the savings account and fixed deposit account to be exempt from taxes up to Rs 50,000 for senior citizens under a newly inserted section 80TTB.
- Under Reporting / non-reporting of Income – rental or capital gains
If you think that you can get away from reporting your income less than what you receive while filing your taxes, you are wrong. All your income details are now tracked through your PAN card and are reported to the Income Tax Department by banks, employers and other financial entities.
If you have more than one house property, you should declare your rental income in the ITR Form even if you don’t receive it as notional rent. If you have sold your properties then make sure you report the capital gains earned. Hiding or underreporting income will lead to you receiving a notice from the I-T Department.
- Not Reporting Exempt Income
Even when the dividends from stocks and interest income from the savings bank accounts up to Rs 10,000, are exempt from tax, you still need to report it in your tax return form. There are specific columns assigned to report your exempt incomes in the ITR form. You need to notify the Income Tax Department about the exempt income through this.
- Not Verifying your Return
Filing and submitting your tax returns doesn’t mean your work is done. You will have to verify your tax return by sending a signed acknowledgment to the tax department at CPC Bengaluru by post or e-verifying it using the EVC option. The Assessing Officer starts processing the tax returns only after you have verified it. A return not verified is as good as not filed.
- Not Revising Mistakes
Doing mistakes is one thing and leaving the mistakes unchanged is another thing. If you realize that you have made a mistake in the ITR form, you still have a chance to rectify it by filing a revised return. If you do not revise your return, the Assessing Officer will process the return as it is and if a mismatch is found, you will be served a notice.
- Not reporting your income from multiple Form 16s
You may have switched jobs during the year and hence you must make sure that you share these details with the current employer. This will make sure that TDS deductions and income earned from the previous employer are taken into consideration. This is because the new employer will consider only the income and salary of current employment which may lead to incorrect tax deductions or double deductions too.
‘To err is human’ but to learn is an act of self-realization. So, make sure that you learn from your mistakes and correct them in time so that you do not pay a hefty price.
Guest post from hrblock