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ITR Filing: Mistakes to Avoid Getting Tax Notice

Income Tax Return (ITR) filing can be quite a dreary process for most people. It’s even duller for people who have a substantial number of investments. ITR filing involves a number of documents. This is why a lot of people end up committing mistakes that can further complicate the ITR filing process. The Central Board of Direct Taxes (CBDT) has made online ITR filing for everyone a mandate with the exception of super senior citizens above the age of 80 years. Since all tax records have been integrated online, even a small and single detail mismatch can be conveniently detected and can lead to an inquiry. However, not all tax notices are a worrying cause of concern.

Usually, the income tax (IT) department issues notices after ITR filing is done or after the relevant assessment year has ended. Simple calculation errors will result in the IT department issuing you a demand notice, demanding you to pay the due tax. However, serious transgressions will result in in-depth scrutiny assessments and fat penalties.

In order to help you undergo a smooth ITR filing process here is a list of mistakes that you must avoid getting a tax notice.

Non-Declaration of All Income Sources

As per the Income Tax Act, declaration of all your income sources is mandatory. Most taxpayers make a mistake here. Most people have income from sources other than salaries and business income such as interest earned on fixed deposits (FDs), savings account, public provident fund (PPF), and insurance. While some of the investments are tax-free, a 10% TDS (tax deductible at source) is applicable to FDs. Note that even though some income sources are absolutely tax-free, you are still required to report them all. Non-declaration of any kind can result in the IT department sending you a show cause notice.

Any investment made in the name of your child also has to be declared. You must keep in mind that any income earned from an investment in your child’s name is also taxable at the same rate as that applicable to the parent. In such cases, minor’s income is clubbed with the parent’s income for the purpose of determining the net taxable amount.

If you have recently switched jobs, you are required to report income earned from both the employers.

Mismatch in Personal Details

One of the blunders that you must avoid is entering wrong personal details on an ITR form. Last minute rush, carelessness, and confusion can lead to errors in inputting the right personal details such as your name, PAN Card number, email ID, address, etc. This may seem a harmless error, but a mismatch in personal details on an ITR form can result in the IT department rejecting your ITR form. This may cause non-payment of taxes or notice on the part of the IT department, and loss of refunds. You must input a valid and active email ID and your latest postal address because all important communication with the IT department takes place through emails and post. Any mistake on this end can lead to a severe lack of communication. The name that you enter on your ITR form must match the one that is on your PAN Card.

 Wrong ITR Form

As a taxpayer, it is very important that you know your tax category and which ITR form is applicable for you. For the assessment year 2018-19 the IT department has 8 ITR forms, namely ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, ITR-7, and ITR-V. Each of these ITR Forms is applicable on the basis of the taxpayer’s status, and his/her income type.  For Example, ITR-1 or SAHAJ form is supposed t be filled by resident individuals, with all details of their income from salary or pension, single house property and income from other sources. Before you file an ITR, you must be absolutely sure about your tax category and fill the right form.

Incorrect Property Declaration

If you have a single house property and you have duly declared it, you are good to go. However, if you have more than one house property and you have not declared it irrespective of its occupancy, then you are making quite a heavy mistake. The thumb rule here is that if you have more than one house property, you stand liable to pay tax on it despite its occupancy status. Non-declaration of more than one house property is one of the most common mistakes taxpayers make while filing tax returns.

Filing for the Wrong Assessment Year

It is very common for taxpayers to get confused about the year of filing the income tax returns. You should always remember as per the income tax department the Indian financial year is calculated from 1st of April of one year to the 31st March of the subsequent year. For all tax calculations assessment year also follows the same dates. To make it easier for you to determine your correct assessment year here is an example. If you are filing ITR in the year 2019, then your assessment year is 2018-2019, i.e. from 1st April 2018 to 31st March 2019. Say you were filing your return in 2018 then the correct assessment year is 2017-1018, i.e., from 1st April 2017 to 31st March 2018.

Mistakes in Bank Details

Often taxpayers make the mistake of filling out wrong bank details. You must check, recheck, and ensure that you fill correct bank details along with the right IFSC code of your bank. Incorrect bank details can lead to delayed refunds, loss of refunds, or transfer of refunds to the wrong account. How trivial this mistake may seem, it can truly be cumbersome to deal with.

As a responsible citizen and a prudent individual, it is important that you understand the significance of ITR filing and ensure that you file your ITR with prior knowledge of the process, a complete understanding of all what could go wrong factors, and file it well before the deadline to avoid any mistake in the process.

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