Income Tax Return 2019: Tax filing mistakes may not only make one’s tax return invalid but sometimes may also make one liable for penalty and prosecution, depending upon the nature of mistakes.
Income Tax Return 2019: The Income Tax Department had recently extended the due date for filing an income tax return for AY 2019-20 from July 31 to August 31, 2019, for certain category of taxpayers. However, as even this extended deadline is not far away, taxpayers – who are yet to file their ITR – seem to be in a hurry to meet this deadline. But in this rush to file their tax return within the due date, some of them are likely to make some mistakes, which is not unusual. That is because apart from tax filing being once a year activity, tax rules also keep changing from time to time, which many people may not be aware of.
Whatever be the case, in a bid to help taxpayers avoid such mistakes, we have compiled a list of 5 common tax-filing mistakes. Here they go:
1. Choosing incorrect income tax return form
Every year the Income Tax Department keeps notifying various I-T return forms for the convenience of taxpayers, depending upon their types, income, and residential status. However, it has usually been seen that many taxpayers choose incorrect income tax return forms while filing their tax return. For instance, while ITR 1 to ITR 4 Forms are applicable to individuals and HUF, ITR 5 to ITR 7 Forms are applicable to firms and companies. However, some taxpayers having an income of above Rs 50 lakh file their return in the ITR 1 Sahaj Form, which is meant only for those having income below Rs 50 lakh, that too only from salaries, 1 house property, other sources (interest, etc.), and agricultural income up to Rs 5,000. Therefore, it is important to choose the right tax return form while filing ITR as also to remain updated regarding changes in the form, if any. Otherwise, the tax return so filed will be treated by the I-T Department as invalid.
2. Incorrect determination of the residential status
Incorrect determination of one’s residential status is also one of the most common tax filing mistakes. “The most common mistake is that the determination of residential status is not done correctly. There are two parameters of residential status – 60 days and 182 days. So, first of all, get your residential status right. That is because your form is also your taxability of income and reporting of assets, especially foreign assets, are totally linked with your residential status,” says Surabhi Marwah, Partner, People Advisory Services, EY.
So, even if you are using the pre-filled I-T return forms, make sure to verify those details.
3. Not e-verifying the filled I-T return form
It is usually seen that most people forget to e-verify the filled I-T return form. So, “make sure to e-verify the filled form. Lots of time people send the physical copy of ITR-V to the central processing center and forget to e-verify the form. However, if not e-verified within 120 days of filing the return, the I-T return can become invalid,” informs Marwah.
In fact, the I-T Department will start processing your ITR only after it is verified by you. Also, income tax refunds, if any, will be processed only for the ITRs that have been submitted and verified.
4. Not knowing available tax reliefs
It is common knowledge that there are deductions available under the various sections of the Income Tax Act, which one is entitled to get while filing one’s tax return. However, these deductions keep on changing from time to time. Therefore, it is important for taxpayers to keep themselves updated regarding any changes in the deductions so that they don’t miss out on the benefits while computing their taxable income. Apart from these deductions, there are some other tax reliefs which are little known to taxpayers. It’s, therefore, imperative for taxpayers to be aware of all deductions and tax reliefs before filing their tax return.
5. Non-Disclosure of Exempt Income
There are certain types of income which are exempt from the levy of tax, such as salary allowances, dividend income, certain types of capital gains, life insurance amount on maturity, withdrawals or maturity proceeds of PPF, EPF and VPF, among others. Although these incomes are exempt from the levy of tax, they still need to be reported in the ITR.
Apart from these tax filing mistakes, there are many other mistakes too which individuals usually make while filing their tax return. The crucial point to note here is that such mistakes may not only make one’s tax return invalid but sometimes may also make one liable for penalty and prosecution, depending upon the nature of mistakes. So, why to take them lightly?
Courtesy: Financial Express