For the last couple of years, income tax return (ITR) filing has become a completely online process. However, there are risks of making mistakes or filling in the incorrect information when you are expected to fill out different specifics and follow other measures when filing your ITR. E.g., you can use a wrong ITR form, miss reporting an income, filling in incorrect tax challan self-assessment details or incorrect TDS (tax deducted at source) data, account number of tax deduction, and any other specifics; all of these will get you a tax note.
Avoid picking the incorrect type
Depending on their marital status, leads under which their streams of income fall, level of taxable income, owning shares/management in a corporation or member of a partnership firm, etc., the government has prescribed various ITR types for different groups taxpayers. Sometimes, taxpayers choose to disregard any of these requirements, and mistakenly choose an incorrect type.
Wrong Credits in Tax
This means a difference in the amount of tax credit you received on your tax return and what is in the income tax authorities’ databases. Different explanations for the mismatch could occur. One may be that you filed inaccurate information, or the deductor could not have deposited TDS with the government, or it is not expressed in Form 26AS. So, cross-check the tax deducted from your income with the TDS reflected in Form 26AS to prevent having a tax warning. If there is a discrepancy, get it rectified until you file your tax return.
Not filing a tax return certainly increases the chance of receiving a tax notice when you are supposed to do so. Remember, if your taxable income is over the basic exemption limit, you can file your tax return up to Rs 2.5 lakh for people under the age of 60, Rs 3 lakh for those within the limits of 60 and 80, and Rs 5 lakh for anyone over 80.
Additionally, you should register your return before the due date. The due date has been extended this year to 31 November 2020. Even after that, until March 31, 2021, you can file a return, but with a penalty. Once the appraisal year, i.e., March 31, is over, a report cannot be filed.
Mistakes in claiming section 80C deductions
Many of them agree that the contractor’s contribution to EPF needs to be used in seeking compensation from Section 80C. It’s wrong. Similarly, Sec 80 C is liable for only the principal repaid on housing loans. Many other deductions are asserted under wrong heads that contribute to their denial and tax responsibility arising as a result.
The discrepancy in details about TDS:
Many of us return files without checking the TDS (tax deducted at source) credit of Form AS26 kept with the IT Department. If your boss or someone else who has deducted TDS does not deposit the same with the IT Department or does not correctly mention your PAN, the number will not be reflected in the default resulting from AS26. Therefore, verify that the deducted TDS credit is listed in Form AS 26. If there is a problem, take prompt steps to fix the same matter.
Taxpayers also miscalculate, in addition to math mistakes, percentages relating to their net income, withholding, and projected tax payments, the Earned Income Tax Credit, the Child, and Dependent Care Credit, the standard deduction for aged 65 and over or blind, the taxable interest rate and the taxable value of social security compensation.