Though we should file income tax returns every year, we still make some errors. There are some common errors which we make in most cases. But if we are careful enough, they can be avoided in our returns.
Impact of tax filing errors:
A mistake made either on computer or in paper forms does not cost cash penalty, but it often results in delay in receipt of any refund that one expects.
Here is the list of the most common tax filing errors.
1. Mathematical errors – The most common mistake made in tax returns every year is mathematical mistake. Mistakes in transferring figures from one schedule to the other will invite correction notice immediately. Mathematical errors can lower your tax refund or result in paying more tax than you should pay.
2. Choosing the wrong form – Choosing the correct form is very important while filing a return. There are seven forms among which only four are meant for individual taxpayers. Filling of a wrong form invites a defective return notice and the return is considered as not filed. Some online tax filing portals select the ITR form on their own on the basis of your supplied tax data, but one should always know the changes happening every year in the various forms in order to avoid mistakes in the returns filed by them.
3. Failure to declare the bank interest income – Many tax return filers forget to declare the income they earn from the interest on fixed deposits and other investments made in bank. This lowers their tax liability by reducing the income. But such type of error should be corrected immediately. Such failure amounts to concealment of income which is a punishable offence and should never be done by an assessee.
4. Failure in preparing books of accounts – Most of insurance agents file their returns for the purpose of claiming tax refund for the TDS deducted from their commission income. Commission income belongs to the category “income from business or profession” and agents are supposed to file their return in ITR4. Failure to file the balance sheet along with the profit and loss statement should not be practiced and it may amount to non-compliance in many cases. Books of accounts should be prepared and it should match with the bank statement.
5. Not reporting the income which is exempt – Incomes like dividends and long-term capital gains are exempt from tax. But one should report them in their tax return as their details are given to the IT department by the companies and firms.
6. Quoting wrong email ID – As all communication by the income tax department is done through email, hence one should ensure that a correct and functional email ID is given by him in the tax return form filed on his behalf.