Mentioned below are some of the most common tax filing errors that you need to prevent.
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Anyone with taxable income is expected to file their return. Furthermore, those with income over Rs 5 lakh are obligated to e-file their return from the 2019-20 assessment year. Filing error-free Income Tax returns is very important to prevent potential issues. Let’s see the mistakes most commonly made that should be avoided.
Incorrect personal information:
A significant number of returns are denied each year due to incorrect personal details such as name, bank account number, IFSC code, and address. Which results in delays in refunds. But make sure to fill in contact information accurately.
Mistakes in seeking deductions under section 80C:
All of us assume that in receiving sec 80C compensation, the employer’s donation to the EPF must be used. This is wrong. Similarly, Sec 80 C is liable only for the principal owed on mortgage loans. Many other deductions are asserted under wrong headings which lead to their denial and consequent tax liability arising.
Interest income on savings account:
While interest earned on a savings account is not taxable up to Rs 10000/- a year, the interest obtained must be listed in the return under the heading ‘Income from other sources’ and demand exemption.
Failure to plan for more than one property:
A lot of people own more than one home these days. Those could be empty or self-occupied. However, only one property can be claimed as self-occupied according to the IT Act 1961. The other land is charged at practicable local rates after assessments and maintenance are excluded at 30 percent.
Differences in TDS details:
Many of us file returns with The Department without checking TDS Form AS26 credit (tax deducted at source). If your boss or anyone else who has deducted TDS does not deposit the same with The Department or fails to list your PAN correctly, the number will not be reflected in from AS26 leading to default. Therefore do test that the deducted TDS credit was listed in Form AS 26. When a problem occurs, take prompt steps to rectify the same.
Failure to pay advance tax or self-evaluation tax:
All of us have profited from places that TDS does not apply. Before the end of the financial year, i.e. March 31, the person is expected to determine the tax obligation and pay Advance tax or self-assessment tax. Failure to do so would incur a fine of 1 percent per month from the next fiscal year April 01. Often people do file returns without paying the fine necessary.
Filing incorrect ITR Form:
Due to a lack of knowledge, many can not pick the right IT Form. Let’s say, to explain, you’re a salaried guy, you own a home, you get some tax-free income, and you get interested on your savings account. You may find ITR 1 needs to be filled in. That is only right if there are less than 15,000 excluded sales during the financial year. If it crosses Rs 15000 then you will file ITR2.
Failure to dispatch ITR V in time:
If you do not have a digital signature when e-filing IT return, submitting properly signed ITR V to CPC Bangalore by standard or speed post only is necessary. Sign the ITR V in the given box with the blue or black ink. The ITR V must be forwarded within 120 days of return filing. If you fail to do so, your return will be considered as null and void within the stipulated period.
Not reporting all sources of revenue
The most frequent error taxpayers make is not reporting any of their income sources. One form of revenue that many individuals miss is interest gained on a bank savings account and on Fixed Deposits (FDs). This income is paid according to the tax rate. Generally, banks withhold 10 percent of the interest paid on FDs as a source tax-deductible (TDS). However, you are entitled to pay tax accordingly if you come under a higher tax bracket of say, 30 percent. Not reporting these revenues may draw a note from the department of income taxation.
Remember, if you have just changed your work, make sure you still record the earned income from your former employer.
In fact, any income gained by a minor from savings is taxed according to the parent’s higher income tax rate. The minor’s salary is clubbed with salary from the individual when determining net taxable sum. When you’ve made savings in the interests of your family, keep that in mind before filing your taxes.
Not paying tax on household property
Most people believe that there is no revenue from multiple residential properties and that there is no tax payable; indeed, this is a fallacy. When you buy more than one home, you are required to pay a certain amount as rent, even though you have not received any revenue from it or are unoccupied. Tax is not only owed in favor of the house you occupy. Profit shall be assigned to all other properties, and you shall pay tax on house income.
Providing incorrect postal and email address
Because the income tax department shares all the required information via email or fax, it is highly important to enter these details correctly before filing the taxes. A slight error in filling out this information means you can skip crucial updates. And when you pay your income tax, check and recheck your postal and email address.
Not reporting income that is exempt
Only disclosing income that is excluded Some forms of income are exempt from tax, such as long-term losses, dividends, etc. While you don’t have to pay any taxes on these sales, reporting them is necessary. Note that the brokerage house or investment company must give that information to the department of income tax.
Not reviewing the form before filing
Whether you have filled out the forms electronically or manually, mistakes are expected to happen. And it makes sense to carefully test the filled-up form to prevent errors. And if your tax planner or accountant filled out the paperwork on your behalf, you have to review the form in person to ensure the information is correct.
Mind that merely taking an interest in the method of tax reporting will help you prevent several of those errors. Failure to file tax returns can cause numerous headaches and problems. We do not like this. So please avoid the mistakes listed above. If you are not self-confident in filing return please seek medical support. To maintain emotional health, it is best to file the report accurately as well as on time. Happy return-filing!
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