8 Common Tax Filing Mistakes to Avoid
8 common tax filing mistakes to avoid “ You may delay ,but time will not” we ignore this saying in many aspects of life and ITR filing is certainly one of them. As the deadline to file ITR for Financial year 2021 – 2022 is almost here ( 31st July for taxpayers whose accounts don’t need to be audited).Lets look at the common Errors taxpayers make while filing the ITR.
8 Common Tax Filing Mistakes to Avoid
1. Picking the wrong ITR form
The choice of ITR form depends on your sources of income. There are 5 heads of income as per IT Act – income from Salary, income from House property, income from profit and gain of business or profesion, capital gains and other sources, you should select your ITR form as per your nature and income.For example , individuals havings their income from salary, one house property and other sources use ITR from 1 ,but if they sold their investment , ITR from 2 should be used . If you are confused , consult a CA.
2.Selecting The wrong Assessment Year
Assessment Year ( AY) and Financial year ( FY ) can be confusing . while Financial year ( FY ) ( April to march ) means The year during which income is earned , Assessment year ( again April to march ) is the year that follows the financial year in which they are income is taxed. In other words AY is the year succeeding the FY.So , for Financial year FY 2021 – 2022 , Assessment year AY is 2022 – 23.
3. Not mentioning All bank Accounts
All the taxpayer should report all of their bank account including joint account in the return. Not disclosing all your bank accounts in ITR filing is against IT Rules . So provide details of all your Domestic and Foreign bank Accounts. In fact you must also mention the bank account that were closed during the financial year.
4. Not disclosing All sources of income
Some of us have additional income such as agricultural income, dividend, winning from lottery or game shows etc.We should disclose all the income even if they are exempt from tax.Mentioning all these different income ( along with their sources ) is mandatory.
5. Non disclosure of losses
Sometimes we think that losses are not important to be reported in the ITR, but it’s incorrect.Losses incurred in business or capital losses can be carry forward in future years and set off against income of future years.For claiming set off of losses it is important that you should disclose all the losses in your return.In ITR different schedules are available depending upon type of loss. One needs to ensure that correct schedule should be selected.
6. Not Tallying Form 26 AS with Form 16
Form 26AS is a consolidated statement of the TDS, TCS and advances taxes self assessment taxes that are already deducted/paid by you. You should ensure that all the income reflected in you Form 26AS is also considered while filing ITR. Also keep Form 16(provided by your employer) and other TDS certificate readily available with you to cross check with 26AS.
7. Minor child income
As per the Income-tax Act minor children’s income should be clubbed with their parents whose income is more and we often forget this. Deduction of 1500 can be claimed while computing minor child in one that needs to be clubbed with his parents.
8. Forgetting to verify ITR
To complete the tax filing process, you need to verify your ITR. As per the latest CBDT circular, your ITR should be verified within 30 days from the date of its e-filling. If ITR is verified after 30 days then the date of ITR verification is considered to be the date of filing the return and there could be penalty implications.
There are multiple ways to do it:
Sending a signed physical copy to CPC, Bengaluru. E- Verification using Aadhaar OTP. Online verification using the internet banking service of a bank.
Hope you will use this list to avoid the 8 common tax filing mistakes. This way you don’t have to worry about receiving an income tax notice or paying fines and penal interest charges.
Income Tax Return Filing Portal – CLICK HERE