Except in certain cases, filing the Income Tax Returns is mandatory. Owing to the complexity, people tend to make many mistakes while filing the returns, which can be easily avoided if proceeded with more caution. Through this article let us discuss such common mistakes made while filing the ITR.
Choosing the Wrong ITR Form
Every year, the Income Tax Department releases new or revised ITR forms with different eligibility criteria. The selection of ITR forms varies with the sources of income to be reported. Therefore, the taxpayers should read the conditions laid down carefully before selection of ITR forms to avoid receiving notice from the department
Non e-verification of ITR
With the Income Tax Department walking in line with digitisation, the returns filed should be e-verified either by way of Aadhaar OTP, EVC or through Net Banking. If it cannot be e-verified through any manner the returns should be manually signed and dispatched to the Department. If the taxpayer fails to do any of the ones stated above within 120 days of filing return, the return filed shall be considered invalid.
Mismatch in Income reported and Form 16/Form 26AS
The taxpayers, while filing the returns are required to cross verify the income reported with Form16/Form 26AS. If the income is under reported when compared to Form16/Form 26AS, it would result in receiving notice from the department. If there is any discrepancy in the income shown in Form 16/Form 26AS, the same should immediately be corrected by the taxpayer.
Email ID and Mobile Number
The Income Tax Department is relying more on electronic communication. The department sends all the communications including notices to the Email ID and mobile number registered with the department. Due to this, it is even more important for the taxpayers to provide their email id and mobile number correctly with the department. Incase of any changes, the same should be updated in the profile of the taxpayer in the Income Tax Portal.
Details of Bank Account for Refund
The Department remits the refund directly to the bank account, it is important to ensure that the bank account details are correct. In case the details provided are incorrect the refund will not get credited to the bank account and the assessee has to go through the cumbersome process of raising the request for refund reissue. Ensure not to provide the details of the bank account which you are intending to close in the near future.
Not Reporting Capital Gains on Switching Units of Mutual Funds
These transactions are not reflected in the bank statements and so do not find a mention in the Income tax return. The profit earned on such transfers are left unreported as they are not routed through the bank account of the taxpayer. As switching or shifting from a particular scheme to another may result in profit or loss, therefore it should be reported in the Income Tax Return.
Not Mentioning Exempted Income
According to the Income tax laws, a taxpayer needs to report all his income, whether exempt from tax or not. Exempt incomes are not taxable, however, not mentioning the same would invite notices from the income tax department.
Not Reporting Interest Received on Income Tax Refunds
Most taxpayers miss reporting interest received on income tax refunds. Interest received on Income Tax refunds should be reported as income from other sources while filing your Income Tax Return.
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