The deadline to file income tax returns is only a few months away and while many have already filed it, there are those who are going to do it in the next few weeks or months. However, there are several things one needs to be careful about. In a conversation with Outlook Money, R.L Kabra, Founding Partner of R Kabra and Company, talks about various things one must keep in mind and mistakes one should avoid while filing the income tax returns, in conversation with Vishav.
How costly can mistakes prove when it comes to filing the tax returns?
It’s often that some taxpayers or their representative make mistakes while filing tax returns. It complicates the matter sometimes giving rise to tax demands, and sometimes even penalties with further actions required by taxpayers and department for rectification. It can also sometimes lead to attachment of bank account or recovery of tax arrears. Hence, one must avoid the same and file their tax returns properly.
What are some of the common mistakes that taxpayers make while filing their tax returns?
Some of the common mistakes include incorrect basic details like PAN, personal information, email ID, bank account number IFSC code. Quoting the wrong PAN means that your return will be rejected by the income tax department. Another common mistake is choosing the wrong ITR form. Then there is failure to disclose all sources of income. Sometimes, people file the tax return but do not e-verify it. In that case, the process of filing is not complete and it will be considered as if one has not filed the ITR.
How should one choose the right ITR form?
The tax returns form have been changing practically every year and in current year it has drastically changed for which detailed guidelines have been given. It is critical that tax payers select and file the ITR Form applicable to them. ITR forms are based on different sources or combination of incomes. For example, if one has only salary income, select ITR 1 but if one has salary income as well as capital gain than he need to select ITR 2. Filing returns with incorrect ITR form may lead to rejection of ITR.
What all types of incomes must be declared in the ITR form?
Taxpayer must report all types of incomes - taxable as well as exempt. It is a wrong belief that if an income is tax-exempt, no need to report it. Some of the examples are the interest earned on a savings account or fixed deposit. Even though banks deduct TDS on fixed deposit interest, it does not mean one doesn’t mention the income in the ITR form. If the taxpayer does not mention all sources of incomes in his ITR, it is called concealment of income and is a serious offence.