Income Tax filing 2017: 11 common mistakes that you should avoid
Check out how you can file your Income Tax Return for Assessment year 2017-18 without making these bloopers.
New Delhi: For the salaried individual, taxes are automatically deducted and paid to the government while for those who get their income through business or profession, have to pay income tax four times a year.
However, filing of income tax return –the annual ritual –can get a little irksome if you don't pay heed to the details.
If you commit mistakes in filing your taxes, you may end up losing refund, paying penalty and may even face prosecution.
Chetan Chandak, Head of Tax research, H&R Block India has shared his views with Reema Sharma of Zee Media and given a list of 11 common mistakes made by tax filers in India.
As you are ready to file your Income tax return for the Assessment Year 2017-18, avoid these tax bloopers to prevent any unnecessary trouble.
Failing to provide Aadhaar number
If you are delaying your return filing beyond 30th June 2017 and you are eligible to get an Aadhaar or already have an Aadhaar allotted in your name, don’t miss to quote that in your Tax Return. From 1st July 2017, it is mandatory to quote Aadhaar number or Enrolment ID in the tax returns by all eligible tax payers. Failing to do so will invalidate your return and other related consequences may fall.
Failing to File I-T Return
Don’t think that your responsibilities end once all your tax dues are clear. If your income exceeds Rs. 2.5 lakh for Financial Year 2016-17, you need to file an Income Tax Return. Remember that this income is calculated before accounting for all the deductions.
Filing Physical Return where e-Filing is required
The government gives you the option to either file your tax return physically or do it online. However, if your assessable income exceeds Rs. 5 lakh, it becomes mandatory for you to e-file your tax return. But if you are a senior citizen, you can still choose to file a physical return.
Not Studying Form 26AS
Your Form 26AS or Tax Credit Statement gives you all the important details of taxes you have paid. Don’t forget to check it before filing your tax return. It will help you in eliminating any errors in tax calculations so that you can file an accurate return.
Incorrect Personal Details
Imagine what will happen if your refund gets credited to another person’s bank account or your refund cheque gets delivered to a wrong address. Providing incorrect personal details in your ITR can create several issues like this. Therefore, you must avoid such silly errors and file carefully.
Excluding FD Interest from your Income
Interest income from your saving account is exempt up to Rs. 10,000 but interest income from your FD isn’t. Half knowledge is a dangerous thing which becomes evident when some people exclude FD interest from their taxable income. Remember that every single rupee earned in this case is chargeable to tax.
Under-reporting your Income
Remember that hiding your income to evade tax is a crime. If caught, you can end up paying a heavy penalty and even land in jail. These days, tax department is easily able to track your income through your PAN. Every large transaction is reported annually by companies, banks and other financial entities to the government. Therefore, you must disclose all your income, clear your tax dues and file tax returns on time. For example, if you have two house properties, you need to add rental income to your earnings even if you don’t have any. You must disclose income earned through Shares, Mutual
Funds, Property Capital Gains, etc. If you have switched jobs multiple times in a year, you must bring your income from all the employers to light.
Failing to Report Exempt Income
There are several different types of incomes which are exempt from tax. e.g. if you have dividend income from stocks or interest income from savings bank account, you can save a good amount of money from tax net by notifying tax department about it in your ITR.
Using Wrong ITR
I-T department has prescribed different ITR forms for different type of tax payers. You need to choose your ITR carefully before filing your taxes or else tax department will reject it and ask you to file a revised return.
Not Verifying Tax Return
This is a very common mistake made by first-time tax filers. Such people think that their job is done once they have filed their taxes. They fail to verify their return and send necessary documents to the I-T department. If you e-file your taxes, you can either e-verify your taxes from I-T department’s e-filing portal or get physical verification done by sending a printed and signed copy of ITR-V to CPC-Bengaluru.
Not Revising Your Return
If you have made a mistake in reporting your income and savings during the year, you can still correct the return by filing a revised return. Till previous Financial Year, the government allowed tax filers to revise return within two years from the end of the Financial Year for which the return was filed. However, from this Financial Year or F.Y. 2017-18, you will get only one year to revise your return from the end of relevant F.Y. So, if you find any mistakes from your end in your filed return then you should not wait for a notice from tax department before taking any action. Instead, you should immediately file a revised one.