Like we have discussed in the other articles, the Indian taxation system can be a complicated process to follow. It is essential that you file your returns according to the newest regulations and policies. This is because any errors you make can earn you penalties. In this article, we have for you a list of nine common errors most taxpayers make. Study them carefully and ensure you avoid them.

Not Filing Returns

It is a common misconception that if your income is below the taxation limit, you need not file your returns. However, the law requires that you file a return if your yearly income goes over ₹2 lacs. Further, you might earn interest on your investments. These must be duly reported to the Income tax Department even if they are not taxable.

Using Incorrect Forms

The IT department has released different forms for various categories of taxpayers. Choosing the wrong form can result in the department considering your return erroneous. It is advisable that you check with a professional to help you choose the relevant forms. Or you could e-file your returns.

Filing Multiple ITR forms for Multiple Form 16s

In case you have changed your job in the last financial year, you will receive Form 16s from both employers. Make sure that every form is carefully accounted for in a single return. This is because, both your employers could have deducted tax at source and submitted it against your PAN. The salary you earn from both jobs, and the deductions you can claim will be counted together when calculating the tax you owe. Your tax exemption slab, and the refunds you can claim will also be calculated. All these details are present in a Form-26AS that is a consolidated tax statement. You can check the information in this form from the official website of the Income Tax Department.

Mistakes in Entering Information Such as Bank Details, PAN, TAN

Before submitting your return, make sure you have entered the correct  PAN and TAN numbers. Also check the IFSC code of your bank and the correct bank account number after ensuring that the account is active. All correspondence details such as postal and email addresses should be checked for possible spelling errors. It is also preferable to submit a personal email address and phone number instead of an employer-assigned one. These precautions will ensure that you don’t miss receiving any important notifications from the IT Department.

Not Checking TDS details

Before submitting your income tax return, it is advisable to check your Form 26AS on the IT department’s official website. Follow the instructions for registration using your PAN. After the registration is completed, you will be able to access your Form 26AS. Make sure that all the tax deducted at source has been recorded against your name. Also check if adequate tax is deducted because most institutions calculate TDS according to the minimum tax brackets at 10%. You might incur additional taxes if the total income you have earned from various sources puts you above the non-taxable bracket. Calculate the additional tax you must pay according to the total earnings from all investments. These can be company bonds or deposits, non-convertible debentures, interest on bank deposits and others.

Not Listing All Sources of Income

It is mandatory to disclose all your sources of income even though they are not taxable. For instance, interest earned on PPF accounts, dividends, tax-free bonds, agricultural income and gifts received from particular relatives are not taxable. On the other hand, capital gains, house rent are all taxable. If you earn insurance commission, that must also be added. Further, if you have made investments in the name of your minor child, the earnings from these investments must be disclosed in your return. Also remember that if you are earning an interest more than ₹10,000 on your savings bank account, you must pay tax on it. The home you live in does not attract any house property tax. But if you own other properties, you need to pay the applicable tax on them.

Failing to Claiming Deductions

According to Section 80TTA, the interest you earn on balances in savings banks and India Post are together added up. If this total falls below ₹10,000, you can claim deductions on them and save on tax.

Not Sending the ITR-V Submission

When you complete the procedures for e-filing your returns, an ITR-V is displayed. This document is an acknowledgement of the return you have submitted. Unless you’re using a digital signature, you must print this form, and sign it in blue ink. Mail this document to the Central Processing Center in Bangalore, by ordinary post only. Make sure you complete this procedure within 120 days of submitting your e-return. Your e-filing process is not complete until the CPC receives this document. Also remember that if your income is above ₹5,00,000 you can file your return by e-filing only.

Payment of Advance Tax

If you incur a tax of above ₹10,000, the IT Department expects you to pay an advance tax every 3 months. If you’re a salaried individual, your employer pays this tax for you. However, if you’re self-employed or if you have earned an income by selling property, stock or such investments, you need to pay these taxes. Not paying this tax will incur a penalty of 1% extra, per month.

Keeping these factors in mind will ensure that the accuracy of your income tax return.

For more information on mistakes people make in filing tax returns , please read following articles:

 

 

  1. http://www.firstpost.com/business/money/11-common-mistakes-to-avoid-while-filing-your-income-tax-returns-2010733.html
  2. http://www.hdfcbank.com/personal/article/know-your-finances-article/hto2kzho/1341566880
  3. http://timesofindia.indiatimes.com/business/india-business/Five-tax-filing-mistakes-to-avoid-this-year/articleshow/21079803.cms
  4. http://www.indianotes.com/Finance-How-to/10-tax-filing-errors-to-avoid/193538/2/T

To read more informative articles on income tax, please visit: Lending Chaupal Tax Resources