No reason to think about taxpayers who have yet to register their ITR for FY19-20. For FY19-20, the last date for filing income tax returns is nearing fast. The I-T department has postponed the due date from 31 December 2020 by 10 days to 10 January 2021. Nevertheless, you can do so with the due care before filing your tax return. If you make an error, you might end up with the department’s tax note telling you to justify the disparity and pay a penalty if any. A significant financial exercise is ITR filing. Here are a few errors you need to prevent while preparing a tax return:
- For various groups of taxpayers, different income tax forms are recommended. ITR-1 (SAHAJ) is only available to resident persons with income of up to Rs 50 lakh and only to those with salary revenue, one household property and other sources. ITR-3 refers to a business or professional income and ITR-4 (SUGAM) applies to the presumptive taxation process, such as for freelancers. While selecting the ITR form, taxpayers must be vigilant. An incorrect form may make the tax return filed faulty and a note from the tax department may be issued by the taxpayer to submit the return again.
- While preparing an ITR, all forms of revenue, whether from past or current jobs or investment income, FD interest rate income, savings account interest income, etc., should be taken into consideration and filed in the required ITR form. If any revenue is not registered, the TDS certificate (Form 16) and Form 26AS will represent a difference. In this situation, the tax department will send a notice of tax query to ask the taxpayer to pay additional tax dues.
- To measure the capital gain, ITR needs complete descriptions of the sale of capital assets, purchases and expenditures. In the event that a taxpayer makes an investment in order to obtain an exemption from capital gains, the taxpayer must include details of the investment and the exemption of capital gains.
- In the event that taxpayers have rendered any investments on behalf of their minor child, the income, such as interest income from the same, will be included as part of the income. Income clubbing is normally performed for a parent whose salary is higher. For up to two children, taxpayers can claim a deduction of up to Rs 1,500 per child.
- A summary of TDS and tax payments on income, such as salary, interest or sale of immovable property, will be included in Form 26AS. TDS and tax payments with Form 26AS should be checked before filing ITR. Form 26AS can be accessed from the portal for income-tax e-filing.
- A taxpayer, except for their inactive accounts or closed accounts, should report all their bank accounts in India. Taxpayers can specify a savings account where they want to be paid with their income tax return.
- Many taxpayers ignore that, even though the gross total income is lower than the basic exemption cap, it is compulsory to file an ITR. You are required to file ITR if a person has deposited more than Rs 1 crore in current bank account(s) during the fiscal year or has spent more than Rs 2 lakh on foreign travel on himself or some other person or if the electricity bill paid during the year surpasses Rs 1 lakh. It is also necessary for resident persons to file ITR if they possess assets outside India or have an interest in any resources outside India or if they are licensed signatories of bank accounts outside India.