Finance

What Are Some Common mistakes made when filing Income Tax Returns?

With the financial year about to finish, people are rushing up to finish their income tax filing. But before you rush yourself and submit your return, you have to double-check every step. Even the tiniest mistake can be harmful to you. The deadline for the income tax return, if you are an individual, is July 31.

It is advised to submit your returns in advance, which allows you to avoid common mistakes on your end. You can also go for e-filing of return if your income is below 5 lakhs per annum. While you file for income tax returns, you have to avoid some errors, that can create issues and penalties. Let’s look at some common mistakes people make while filing taxes.

Choosing the wrong form:

The forms for income tax are different or each taxpayer. A businessman will have to fill different forms as compared to someone who is a salaried individual. The form also differs if people have different incomes. For example, if you have more than 5 lakhs income per annum, you’ll have to fill the ITR-II and when your salary is less than 5 lakhs you have to fill ITR-I form. This is why it’s important to determine the right form while you file your taxes.

Wrong Assessment Year:

You have to quote the right assessment year while you file for income tax. Quoting the wrong business model can cause double taxation. The final year where the taxpayers will pay their income tax return is known as the assessment year. This comes after the financial year, so for example, if the financial year is 2019-20, the assessment year will be 2020-21. This can sometimes create confusion in taxpayers’ minds.

Putting in wrong personal information:

It’s essential that you update and correct all the information provided on the forms before submitting them. This includes personal information like phone number etc. Another thing to take note is the bank account. Check whether the account number is correct, IFSC code is entered correctly. In case of any errors, it becomes harder for the income tax department to contact you. And someone else will be receiving your tax returns. Make sure all the details present in the ITR including the bank accounts are current and active.

Forgot to disclose all sources of income:

You have to make sure that every source of income is accounted for when you file for your income tax return. If you quote just the main information, that won’t be enough. For example, there might be a possibility that you might be earning from fixed deposits or capital from properties that you put on for rent.

You have to make sure all of this information is placed while you are filing for ITR. These earnings can be placed under the ‘income from other sources’ section within the income tax return form. Don’t forget to mention your every source of income regardless of them being exempted from tax or not. If you don’t enter theses details, you might have to answer some queries from the income tax department.

Form 16 & 26AS:

Don’t forget to reconcile TDS or tax deducted at source with the help of form 16 and 26AS. 26AS is a document that contains information of TDS and deposits contained within the government. If you have paid any advance tax, this document will contain that information as well. Before you go ahead with income tax return filing, make sure that these details are present in the 26AS and Form 16. There should be no mismatch.