76630In view of reduced inflation and expenses, will it be right to invest in IT stocks?

Filing of income tax returns (ITR) is one of the most important tasks for taxpayers. It is important to file an error-free ITR to avoid problems in future. Amid the second wave of Covid-19 and restrictions in different states, the government has extended the due date for filing ITR for the assessment year 2021-22. Instead of July 31, 2021, the last date for filing ITR of FY21 will be September 30, 2021. Still if one fails to file the returns within the new deadline then he or she may have to pay late fee up to Rs 5,000 as late fee.

“During filing of ITR, in many cases general taxpayers overlook the sections of the income tax law which allows tax exemptions. That’s why they miss opportunity to save money. It is one of the most important things to keep in mind,” said Suman Nandi, a chartered accountant.

Here is a list of common mistakes people make while filing tax returns.

Incorrect form selection

The selection of incorrect forms creates trouble. According to Manash Ghosh, income tax lawyer, filing an income tax return using an incorrect form is treated as ‘defective’ under tax laws. In that case, the IT department is likely to send a defect notice to the taxpayer concerned.

Incorrect personal details

Over the past few years the income tax department has simplified the income tax filing process. But a large number of returns are rejected for incorrect personal details like name, bank account number, IFSC code and address every year. This leads to delays in refunds. So, be careful when you are filling ITR.

Wrong assessment year

In India, the period from April 1 to March 31 is known as the financial year. Assessment year is the year which will come after the financial year. Many taxpayers confuse ‘assessment year’ with ‘financial year’. For example, most people would file ITR for financial year 2020-21 now (2021-22) which is the assessment year.

Source of income

Every income from any source other than the primary source of income, whether it is taxable or exempt, must be disclosed. Any non-disclosure is a serious offence under tax laws.

Any mistake increases the possibility of the taxpayer receiving a notice from the Income Tax department. “In many cases we see that clients forget to mention all turnover details. It is most common. This type of error should be avoided,” said Ghosh.

Ignoring 26AS

The form 26AS is like an income tax passbook to taxpayers. It contains all transition information of taxpayers against Permanent Account Number (PAN). “Therefore, it is most important to check form 26AS before filing the ITR for every taxpayer,” added Manash Ghosh. Any negligence may lead to less refund or more taxes payable.