14 Mistakes taxpayers usually makes while filing their income tax returns in India
Income Tax Return (ITR) is a form which a person is supposed to submit to the Income Tax Department of India. It contains information about the person’s income and the taxes to be paid on it during the year.
Following are the mistakes by taxpayers usually makes while filing income tax return in India :
1) Not disclosing all bank accounts – In future if income tax identifies non-disclosure may send notice. Current tax laws also require you to provide details of all bank accounts that were closed during the financial year.
2) Not showing exempt income like interest, gift received – Mentioning all of these different incomes along with their sources is mandatory at the time of filing ITR even if such income is exempt from tax.
3) Not showing Capital loss – Many tax filers especially omit details of Capital Gains and losses when submitting their ITR, may have serious consequences, such as an Income Tax Audit.
4) Not showing trading income in shares – With AIS and TIS showing your share trading transaction, it is impossible now to skip.
5) Using the Wrong ITR Form – Using the incorrect form results in a defective filing which will get rejected by the Income Tax Department.
6) Not verifying ITR on time – Tax filing process is incomplete until you have verified your income tax return. Currently, you have 120 days to verify your ITR after uploading form.
7) Not showing foreign assets – Resident having foreign bank accounts or any assets like share, equity holding in foreign company etc need to disclose in ITR.
8) Reporting incomes after deducting TDS – Few Taxpayers sees the bank’s statement and enters the receipt amount as income, not considering the fact that the receipts are after deduction of TDS.
9) Reporting only one salary income -when you switch jobs during the financial year, you miss out on reporting the income from the previous job.
10) Not showing shares holding in company – If you are holding unlisted shares of any company registered under the Companies Act, 2013, then the details of these shares are to be reported in your ITR filing.
11) Failure to reconcile income and receipt – Taxpayers filing need to reconcile all receipts and income with Form 26AS, AIS and TIS before filing ITR.
12) Not Pre-Validating Your Bank Account – If you have not prevalidated your bank account, the IT Department will not be able to credit the income tax refund due to you.
13) Not Declaring Income Earned By Minor Children – The income of a minor child is treated the same as income earned by the parent, so requires clubbing of income with parents.
14) Missing The Due Date For Filing Returns or Not Filing Your Income Tax Returns – While missing the deadline for filing returns can be taken care by paying penalty, non filing can invite the Income Tax Department to launch legal proceedings against you.