Common mistakes in e - filling of Income Tax Return (ITR) - Tax Finance Info.

Common mistakes in e - filling of Income Tax Return (ITR) - Tax Finance Info.

            E – Filing has emerged very quickly for the purpose of filing returns. But due to inadequate knowledge online return filers make lot of mistakes while e –filing.  Let us throw lights on such mistakes made while filing online return:

1.  General Mistakes in E – Filing:

                                                                 

        »         Te first ever mistake is entering the personal details in Income Tax Return form that does not match with the PAN database. This creates an error in filing return.

        »         Many a times wrong Income Tax Return (ITR) is selected due to speedy work or lack of proper knowledge of which form is to be filled for what nature of income and assessee.

        »         Incorrect communication details are provided such as incorrect e-mail ID, Mobile Number and Residential Address etc. This will lead to lack of receiving important communications from Income Tax Department.

        »         Incorrect Bank details are provided by mistake. This will create delay in receiving the Income Tax Refund if direct deposit of refund is opted for.

        »         Providing of incorrect Residential or communication address will lead to failure in receiving the Refund cheque if the same facility is opted at the time of filing return.

        »         Many assessee don’t the mandatory criteria of digitally signing the return, so they send the physical ITR-V that is self signed. This leads to rejection of Income Tax Return.

        »         There is no need to pay tax if the demand is below Rs.100, but the assessee still pays it. Better remember it and save money. And also you will not receive the refund if the same is below Rs.100 so don’t wait or ask for it.

        »         After filing the return online, people many times think that the process of filing return is over and forget to send the ITR-V to the income tax department within 120 days of E – filing of Income Tax Return. It is mandatory to send the self signed copy of ITR-V to CPC Bangalore for verification if the online return is not signed digitally.

2. Mistakes in case where assesses earns Income from Salary:

        »         Assessee forgets to match the amount of salary with that of the figure in the Tax Credit statement i.e. 26AS. This will result in rejection of the return.

        »         Mistakes are made in matching the figures in case where monthly salary is directly deposited in a bank Account.

        »         Many a times in spite of knowing that the assessee have the following part in his/her income fails to select ITR -2:

§  Exemption that may exceed Rs.5000

§  Income from more than one house property or Brought forward loss of previous year.

        »         The assessee who earns income from Business & Profession along with the Salary income, should select ITR-4 and not the other forms.

3. Mistakes in case where assesses earns Income from House Property:

        »         The mistake that is made in filling details of House Property is that the assessee forgets to enter the income from rent that is in the ratio of his/her ownership in case where the property is co-owned. This will lead to unnecessary increase in Taxable income and the tax thereon.

        »         Municipal taxes payable are mistakenly taken as the deduction where only tax paid to local authority is allowed as a deduction on payment basis and not on due basis.

        »         After entering the interest on borrowed capital with respect to house property the maximum amount allowable as deduction will be Rs.1,50,000 and so the Income from House Property will be auto calculated. So don’t enter figures on your own.

4. Mistakes in case where assesses earns Income from Business & Profession:

        »         Income from Speculation business and Income from Lotteries and Horse Races are mistakenly taken as Income from Business & Profession. But such income is taxed at special rates, so they must be entered in the schedule of Income from Other Sources.

        »         Disallowable income and expenses are many a times not shown separately and are added or reduced in the Income from Business & Profession. This is a checkpoint where such income is to be entered in the return.

5. Mistakes in case where assesses earns Income from Capital Gain:

        »         Mistakes are made in entering the details of Short Term Capital Gain and Long Term Capital Gain in their specific field.

        »         Be accurate while entering details of Long Term Capital Gain arising from sale of Equity Shares or Units as they are tax free.

        »         In case of sale of asset where the benefit of indexed cost of acquisition can be availed, assessee makes mistake in entering the details in the option provided for entering details of capital gain where such benefit can be availed. This creates necessary increase in income and tax.

        »         Mistakes are made in selection of appropriate year of acquisition of asset which will change the amount of indexed cost in case of long term capital gain.

6. Mistakes in case where assesses earns Income from Other Sources:

        »         Keep watch while entering the details of Interest Income. Mistakes are made in entering the interest from saving bank and other interest because the prior is exempted upto rs. 10,000, while the late is taxed at normal rate.

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                Enter special Income separately as they are taxed at special rates.

7. Mistakes in adjusting Current Year and Brought Forward Loss:

        »         The assessee makes a big mistake by not filing the return before due date. This will result in non allowance of carrying forward the current year loss to subsequent years.

        »         Don’t enter amount in the boxes where the amount is auto calculated.

        »         Don’t enter the loss with negative or (-) sign.

        »         Mistakes are made in selecting proper check boxes for claiming the carrying forward of losses.

8. Mistakes in claiming TDS / TCS Credit:

        »         Tax credit on different kinds of income must be claimed against respective incomes only but major mistake is made in this field.

        »         Take care while providing PAN in the challan at the time of making payment of taxes. If you make mistake in entering PAN, the tax paid by you will have no effect and you will have to pay it again.

        »         In case where the Tax Deductor has not filed the return there will be no credits in your Tax Credit Statement i.e. form 26AS. But you are eligible to receive the same if you can provide sufficient proofs. But you will not get the credit currently so don’t claim it above the credit available in the Tax Credit Statement.

9. Mistakes in claiming exemptions:

        »         After the introduction of new Section 80TTA of The Income Tax Act, mistakes are made in entering the details of interest income. Saving Bank Interest is tax free upto Rs.10,000 but the interest on FD and other deposits are taxable as per the respective assessee criteria. Both types of interest are merged many a times which will create problem at the time of assessment procedure.

        »         Mistakes are made in matching the figures in case where monthly salary is directly deposited in a bank Account.

        

        »         In case of claiming exemption of donation under section 80G makes mistake in selecting type of charitable institutes. This may lead to very much variation in calculation of Taxable income because many donations are allowable @ 100% while some are only allowed @ 10%.

        »         People don’t try to divert their exemptions which can be availed in the Income of their spouse or children if the same exceeds Rs.1 Lac.

        »         You cannot claim exemption exceeding the limit provided in the Income Tax Act.