Common Mistakes incurred By Tax Payers
All those who have taxable income of more than Rs.2.5 lacs has to mandatorily file the income tax return. It is very important to file the income tax return without any mistakes. I want to discuss major common mistakes made while filling income tax returns.
Non disclosure of all types of incomes
The followings incomes are commonly ignored while filing returns –
- Interest income from banks
- Income from previous employer
- Exempted income
- Rental income from the house property (Deemed rent), when it is vacant
Not claiming the exemptions/ deductions (Not included in Form-16)
Sometimes, few deductions or saving schemes might have not disclosed to the employer. Those deductions would have not considered in form-16. Few of those deductions are
- House rent deduction
- Deduction against eligible donation made
- Deductions against fixed deposits
- NPS contribution
- Deduction under section 80GG ( when HRA is not applicable )
- Medical expenses incurred for parents (Senior Citizens) on whom medical insurance is not taken.
Non Payment of advance tax
Tax liability is determined based on the tax slabs. Most of the cases TDS is deducted at fixed rate, irrespective of your tax slab. It is obvious that you may end up with tax liability or refund, after ascertaining total income. It is advisable to calculate the tax liability before 31st March and pay the advance tax if it is required. The failure to do so attracts penalty of 1% per month.
In the following cases it is advisable to pay advance tax
- Person who has more than one form-16
- Person who has other incomes like rent, interest, commission etc.
- Person who has sold any property
Forgetting 26AS reconciliation with return
A discrepancy between income as per income tax return and income as per 26AS, may lead to receiving notice under section 143(1). Sometimes, credit for TDS is not included in Form 26AS. In case TDS has been deducted but is not reflected in Form 26AS, follow up with the entity doing the deduction to get the records updated.
Claiming 100% deduction without considering provisions of the Income tax act
Few taxpayers think that they can avail the 100% deduction against the expense incurred. But however, Income tax act specifies how to arrive at eligible deduction against each expense.
For example House rent allowance, donations etc.
It is always advisable to read the income tax provisions or consult the experts, before claiming deductions.
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Tags : Income Tax