Top Five Income Tax Filing Mistakes
Filing of income taxes needs precision and focus. It is a requirement to file taxes before the due date to avoid late-filing charges. If you file your income tax returns last minute or in a hurry, you could end up with numerous tax filing mistakes. With the option of E-filing your returns online, you may consider the process to be simple. However, there could be slip-ups along the way.
Let us take you through the most common Income Tax filing mistakes.
1. Choosing the Incorrect ITR Form:
Be sure to fill out and submit the right ITR forms for the specific category you fall under, whether salaried or self-employed. At times, the income tax department issues revised or new ITR forms that either has an updated criterion or are different from your income specification. The selection of an incorrect ITR form could get you an intimation or a defect notice from the income tax department.
It is essential to know what category you fall under and to choose the right one.
2. Untimely Filing of Income Tax Returns:
Another mistake on a tax return is the untimely filing. You should file your taxes well within time and not keep it as a last-minute job. Keep all your documents (salary slips, dividend receipts, bank statements, etc.) ready. The late filing of taxes attracts a penalty. It causes a hindrance for you to make most of the specific benefits such as losses from capital gains of your investment or business is not possible to be set off in the subsequent financial year in case of late filing.
3. Failing to E-verify the ITR Filed:
Once you complete your income tax returns, it is mandatory to E-verify it. You could carry out the e-verification online through an Aadhar-based OTP, NetBanking, or your Demat Account. Through an offline or traditional means is to manually dispatch a signed copy of the ITR acknowledgement receipt to CPC Bangalore. Do keep in mind, if you fail to E- verify your filed Income Tax returns within 120 days, it will become invalid.
4. Neglecting to Report All Sources of Income:
Whether you are a salaried employee, professional or a business owner. Many times you may miss out to declare all the sources of income. It could range from your salary, business or professional income to your interest on Fixed Deposits, to Capital Gains on any debt or equity investments or any other source of income. All the income heads must be filled and reported correctly. Since your income is linked to your Pan card and all your details are interlinked, any mismatch or neglect to report all sources of your income can result under the radar and scrutiny of the Income Tax Department.
5. Mismatch of Income and Tax Deduction with Form 26AS and Form 16:
If you are a salaried employee, Form 16 is imperative to be produced to you by your employer before you file your taxes. Together with Form 16, you will also need Form 26AS. Form 26AS is a comprehensive tax credit statement that reflects TDS deductions against your PAN number from diverse sources of income. You could download the form from your Income Tax account online. Before filing your taxes, it is imperative to put together your income earned that reflects in for the Forms. Do check for any discrepancies before you input the data. If not monitored this could lead to filed taxes in a wrong way.
Now comes the question of, what if there is a mistake on tax return already filed.
Well, there is a solution to this as well. Under Section 154(1) of the Income Tax Act, the Tax Department offers you the possibility to file for a rectification request to correct your mistakes on a tax return. There is a stipulation of errors that can be taken care of by filing a rectification:
- A factual error
- A calculation mistake
- A minute clerical error
- An error due to missing compulsory provisions of the law.
For instance, these errors could range from a mismatch of the tax credit, advance tax mismatch, income reporting incorrectly mentioned, additional details for submitted for investments or earnings.
With the top five tax filing mistakes of your income tax return and the possibility to rectify the same, next time you file your taxes be sure to keep these in mind. Know more about filing your ITR.
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* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.