We all know that millions of people every year in the country file income tax returns (ITR) at the end of each financial year in March. Especially, salaried professionals and those with businesses are required to file income tax returns in order to claim deductions, if any, apart from furnishing other details related to income.
Although repeating the process every year, many salaried individuals end up making last-minute silly errors that potentially derail their claims and filings. As one delares income, deductions and tax paid via ITR filing, it is absolutely necessary to not make mistakes during the process.
We will find several ways in which salaried individuals can make mistakes in their ITR - something that occurs mostly due to negligence or lack of time. Let us have a look at some of the common rules which you should ensure while filing income tax:
ITR has to be filed by anyone whose income exceeds basic exemption limit set by the government. If your gross taxable income exceeds the basic limit, you have to file tax return. In financial year 2018-19, the limit set for individuals below 60 years of age was fixed at Rs 2.5 lakh.
It is ideal for each and every salaried professional to file income tax return as it helps in establishing you as an honest taxpayer - you will be able to take loans from banks without any issues. Therefore, those who fail to file ITR will not only receive an income tax notice but will also have to pay a fine depending on the income bracket.
You should ensure that you file income tax returns before initial deadline to avoid a penalty. If you get a number of opportunities to file it later, it does come along with a hefty fine. You are required to file it before the end of the year to minimise your penalty on missing the deadline.
If you are yet to file your returns for the year 2018-19, you have to pay a penalty of Rs 5,000. If you fail to pay by December 31, 2019, the liability will go up to Rs 10,000. Also the rule is applicable to return filing for 2019-20 as well. Only small taxpayers, with an income below Rs 5 lakh, are required to pay only Rs 1,000 as fine if they miss deadline.
Let's assume, if you are a salaried professional and are filing ITR on your own, then you will have to select the correct form, else your entire ITR filing will be rejected and you may even get a notice regarding the same from the tax department. You will find seven ITR forms in total but salaried professionals have to choose ITR 1 form to file returns. However, if you have any kind of capital gain along with your in-hand salary, you must select ITR 2 as well.
You will have to enter all your personal details such as PAN card and contact number correctly to avoid rejection or incomplete filing. Usually, ITR filings are rejected by the tax department due to mismatch in personal details.
May be out of greed or due to a mistake, never furnish wrong or misappropriated details while filing ITR as it could land you in trouble. You need to declare your tax-free incomes from investment along with the taxable amount.
It is always advisable to declare all your income from salary, investments or any other exempted income. There are high chances that the tax department will send you a concealment notice if you fail to disclose all your income details.
Claiming deductions under incorrect sections while filing income tax return may become an added liability. There are several sections of the Income Tax Act and each deduction claim has to be filed in a particular section. You may end up with a notice if you have erroneously filed a deduction under a wrong section.
Before filing ITR, if you are confused then it is advisable to match it with Form 26AS - your annual statement for the year or a consolidated tax statement that includes TDS, TCS, and refund. You get a clear picture of all your tax credits and help you identify whether you are entering details correctly in your ITR form. It is ideal to cross-check your Form 16 with Form 26AS to avoid any last-minute mistake, if you are a salaried individual.
You can claim refund on only one of the properties under income tax rules, if you own multiple properties. You need to pay taxes for all other properties owned as they will be deemed as rented out. Concealing details of additional property has serious consequences; the tax department can charge individuals with violation of the Income Tax Act.
Several times when individuals switch jobs, the tax deducted at source or TDS may be deducted by both present and past employer for the same year. It is always advisable that you furnish all your past TDS details to your present employer in order to avoid confusion.
In the ITR form, you should declare income and tax details related to both past and present employer. While double taxation may occur in such cases, furnishing all details with new employer can earn you a refund.
It is ideal to cross-check your ITR filing with a chartered accountant or a tax professional even if you are feeling confident. There are several intricacies involved in filing ITR and mistakes could lead to more liabilities. Most importantly, taxpayers should try to avoid fraudsters who encourage people to file for more deductions under income tax rules.