The hardest thing to understand in the world is the income tax, Albert Einstein once said. We have come a long way since then but complexities of the issue still remain the same. We can, however, straighten up the process of filing ITR by organising things well in advance. All you need is to start collecting important documents from the start and not wait until the last moment to get things complicated. To make things easy for you here are 8 common mistakes people commit while filing income tax return.Also Read - Income Tax Return Filing: Taxpayers May Need To Pay Interest For ITR; Details Here
1) Wrong ITR Form
One of the common mistakes is to file the return in a wrong form. Considering there are 7 ITR forms you need to first figure out which form applies to you. Read: How to Choose the Right Income Tax Return Form Also Read - Income Tax Return: CBDT Issues Over Rs 70,120 Crore Refunds; Direct Link, Process To Check Status
2) Wrong Assessment Year
The financial year is the period in which you earn an income while assessment year is the following year in which your income is taxed. The assessment and financial year starts from April 1 and ends on March 31. For example, this time financial year will be 2017-18 and assessment year will be 2018-2019 Also Read - Income Tax Return: Great Relief For Taxpayers As CBDT Extends Due Date For Filing ITR Till Dec 31
3) Interest Income is Tax-Free
There is lot of confusion when it comes to taxation of interest income. First, you need to understand that interest income from fixed deposits is not tax-free. The whole amount earned as interest on fixed deposit is chargeable to tax. On savings bank account you get tax exemption up to Rs 10,000, after which it is taxable according to the income tax slab you fall into. Moreover, banks deduct interest only at 10 per cent, if you fall in higher tax bracket pay the difference while filing the return.
4) Not Reporting Income From Last Job
If you have changed job last financial year, then don’t forget to show the total income in your ITR otherwise it will lead to unnecessary troubles later.
5) Not Declaring All Bank Accounts
You are required to disclose all your bank accounts in your income tax return against the earlier practice of giving only one bank account in which refund has to be credited. You can exclude only dormant accounts in ITR.
6) Not E-verifying ITR-V
The process of filing ITR does not get completed until you submit ITR-V, which is an acknowledgement that you get after e-filing the return. You can either e-verify it, or send a signed copy to the income tax department by normal post within 120 days of filing your return.
7) Not Declaring Exempted income
You need to mention exempted income such as long-term capital gain and dividend income on your income tax return. The fact that they are exempted does not mean that you don’t need to mention them in your ITR.
8) Not Declaring Foreign Income
If you have any source of foreign income then do declare it in your return.
Follow the above-mentioned