Many of those who have to file their returns for the first time or those doing it at the last moment can end up making some critical mistakes. Here are the most common ones and how to avoid them.
Filing IT returns for most salaried employees isn’t exactly challenging anymore. It hasn’t been since the advent of multiple tax filing services in the past few years. This also means that many individuals, especially younger ones with clearly defined and straightforward sources of incomes such as a salary, now file their own returns rather than use a CA’s help.
Generally, those who have been filing returns for years know the ins and outs of the ITR form and know all relevant deductions and exemptions. However, many of those who have to file their returns for the first time or those doing it at the last moment can end up making some critical mistakes. Here are the most common ones and how to avoid them.
It’s important that you use the correct ITR form while filing your tax returns. There are different ITR forms for different combinations or sources of income.
1. Not mentioning all income sources
It’s important for taxpayers to report all kinds of incomes, whether taxable or exempt while filing their tax returns. You shouldn’t think that just because an income is tax-exempt, you don’t need to report it in your returns.
For instance, the part of the interest earned on fixed deposit PPF or savings account balance must be reported in the return. Failing to mention all income sources in ITR (Income Tax Returns) is treated as an act of income concealment, and may lead to trouble later.
2. Providing incorrect bank and PAN details
You must be extra careful while mentioning your basic details like bank account number, email address, PAN (Permanent Account Number) etc. while filing your tax returns. Quoting a wrong PAN number, for instance, can lead to rejection of the return by the Income Tax Department.
Furthermore, your name and date of birth must also match the details on your PAN card. Providing a working phone number and email address is important for the tax department too, as they use these details for communicating with the taxpayers. Hence, ensure that you provide all such details correctly. Your primary bank account is where you’ll get your tax refund. When providing your primary bank account details, make sure it is your active bank account which you use most frequently, so you can be notified when you receive the Tax Refund. In case you have multiple bank accounts, you should disclose them in your ITR.
3. Using the wrong ITR form and choosing the wrong assessment year
It’s important that you use the correct ITR form while filing your tax returns. There are different ITR forms for different combinations or sources of income. For instance, if you only earn salary income, you must use ITR1 form to file your returns, but if you also earn some capital gains from your investments alongside your salary income, you’ll need to use the ITR2 form.
An income tax return filed correctly using the wrong form is treated as defective by the Income Tax Department. You’ll need to rectify such defective returns later, consuming more of your time and effort. Here’s a tool to help you know the ITR form applicable to you.
Since the tax filing process begins by selecting the correct assessment year. This can be confusing for those filing for the first time. Make sure you choose the assessment year in which you earned the income.
4. Not checking the tax credits
Before you file your income tax returns online, you must make sure that you’ve gone through your Form 26AS and checked for any tax credits. You can download your Form 26AS from your Income Tax e-filing account. This form consists of various incomes and their corresponding TDS (Tax Deducted at Source) details and also details related to self-assessment tax, advance tax etc. You can use all such tax credits for obtaining tax refund and/or for avoiding any additional tax payments.
5. Forgetting ITR verification
Please note that it isn’t enough to just e-file your tax returns; you must ensure that you’ve received the ITR-V form after making your ITR submission, on your registered email address. In the event that a tax return is filed on the Internet, without providing your digital signature or Aadhaar number, it will need to be verified after the e-filing process.
ITR verification can be done using 6 different ways — you may either send a signed physical copy of the ITR-V to the Central Processing Centre (CPC) of the tax department situated at Bengaluru, within 120 days of filing your returns, or you may e-verify using Aadhaar OTP, Demat Account, Bank Account, Net Banking or Bank ATM your returns from within the comfort of your home or office.
This article was created in partnership with our tax solutions partner Quicko.