Income Tax: The last date to file an income tax return is September 15. With only 10 days left to file the ITR, most taxpayers have already filed their return and are waiting for their tax refund.
However, if you have not filed your return, you must ensure that you do not make any major mistakes while filing the ITR.
One expert we spoke to noted that taxpayers must share all necessary data with their tax consultant at least one week before the due date to avoid last-minute glitches.
“The mistakes taxpayers make include not sharing the data with the tax consultant seven days before the due date. Besides, some taxpayers make the mistake of choosing the incorrect ITR form, not disclosing foreign assets in the ITR,” says Pratibha Goyal, a chartered accountant and partner of PD Gupta and Company, a Delhi-based CA firm.
Common mistakes taxpayers make
I. Choosing incorrect ITR form: One of the common mistakes taxpayers make is opting for the incorrect tax return form. For instance, instead of ITR-2, a taxpayer may choose ITR-1, or vice versa.
II. Not disclosing foreign assets in ITR: It is also common among taxpayers not to disclose foreign assets. Sometime ago, the Income Tax (I-T) Department had nudged the taxpayers to disclose foreign assets. Read this Livemint article for details.
III. Form 16 from more than one employer: There could be a situation where salaried taxpayers worked for more than one employer. In this situation, there would be more than one Form 16, and taxpayers are supposed to report aggregate income from all the employers.
“When you have multiple employers, you should aggregate the income from all sources correctly to avoid underreporting,” says CA Shefali Mundra, tax expert at ClearTax.
IV. Not disclosing exempt income: There is a misconception that exempt income does not need to be disclosed. However, experts warn that it should be avoided.
“Exempt income such as gratuity, leave encashment, or commuted pension has to be included in the gross salary and then to be claimed exempt under the relevant section 10 provisions. If such income is used for investments (e.g., FDs, property purchases) and not disclosed, taxpayers may get notices under section 133(6) or 148A to explain the source of funds,” says OP Yadav, tax evangelist, Prosperr.io and former principal commissioner of income tax.
V. Using AIS/TIS data without verifying: Experts also advise that the information given in AIS (Annual Information Statement) and TIS (Taxpayer Information Summary) should be verified and not carried without caution. “Some taxpayers use AIS/TIS data without verifying the same, or they choose the incorrect tax regime. This should be strictly avoided,” adds CA Pratibha Goyal.
For all personal finance updates, visit here