Top 5 common mistakes to avoid while filing your income tax returns
June, 20th 2017
With the due date of July 31 fast approaching, it is that time of the year again when the taxpayers need to file their I-T returns. After all, filing of tax return is compulsory for everyone whose gross total income exceeds the basic exemption limit. The basic exemption limit for individuals is Rs 2.5 lakhs and for senior citizens, it is Rs 3 lakhs. So, if your income exceeds this limit, you need to file the tax return by the due date. Filing of tax return requires caution to avoid mistakes. Keeping in mind few things can make your tax filing a breeze. Here is a list of things to help you sail through:
1. Choose the right ITR Form applicable
There are total 7 ITR forms available for e-filing.This year a lot of changes has been made in these forms. Make sure that you choose the right ITR form applicable to you. For example, there are two I-T return forms - ITR-1 and ITR-2 available for salaried individuals at the moment, and your sources of income will decide which form to use. ITR 3 is applicable for the person having income from business whereas last year ITR 4 was applicable for business income. So pick the correct ITR form. The Tax Department will refuse to accept your form in case you have chosen the wrong one.
2. Claim all the Deductions
Ensure that you have claimed all the deductions allowed under various sections of I-T Act that you are eligible for. For example under Sec 80C- PPF, PF, school tuition fees of children etc, under Sec 80D- Health insurance premium and so on.In case of Salaried individuals, they can claim such deductions even if it is missed in Form 16, provided that such investments are done before 31st March 2017.
3. List all sources of income including Interest Income
Firstly, you need to identify your sources of income under different heads. Under the I-T Act, all incomes earned by persons are classified into five different heads, such as income from salary, income from house property, income from business or profession, income from capital gains, and income from other sources. Thus, you should identify all your incomes from different sources, just to ensure that you haven't missed out something while filing your return. Many taxpayers do not report interest income in returns thinking that since the tax has already been deducted by the bank. But even though TDS has been deducted on any of your income, it has to be disclosed in your return.
4. Reporting all bank accounts
The income tax department has made it mandatory for taxpayers to report all their bank accounts held at any time during the previous year in their tax return. You must provide the name of the bank, IFSC code, and bank account number and mention whether its savings or current account. Remember to mention all your bank accounts. You can omit dormant bank accounts, which have been in-operational for the past 3 financial years. Also, it is mandatory to disclose the cash deposits made during the period of Demonetisation. A new column has been introduced in all ITR Forms to report on cash deposited by taxpayers in their bank accounts during the demonetization period, i.e., from November 9, 2016, to December 30, 2016. However, taxpayers are required to fill up this column only if they have deposited Rs 2 lakh or more during the demonetization period.
5. Report Exempt Income
Earlier there was a single column to report your exempt income.This year, new columns have been inserted in the ITR forms to specifically report dividend income and long-term capital gains exempt under Section 10(34) and Section 10(38) respectively. It is Mandatory to e file tax returns for those with long term capital of Rs 2.5 lakhs or more, even though their taxable income may be below 2.5lakhs.
6. E – Verify your return or send the ITR V acknowledgement on time
The process of filing return does not get completed till the returns are verified. The govt gives you the option of either sending the ITR V acknowledgement within 120 days of filing the return to their office or you can e -verify your returns online also. If you e – verify the returns online, then there is no need to send the acknowledgement. There are various options given by the government for e-verifying your returns. E-verification can be done through Net banking, Bank Account Number, Aadhaar number and Demat Account.