New Delhi: Individuals, firms, and companies have to file returns for the income earned in the financial year during the course of current fiscal. They may face many complications while filing their Income Tax Returns. Even a small mistake while filing the ITR can result in the Income Tax department sending a notice seeking an explanation for the discrepancies.
Here are some challenges faced by taxpayers and ways to avoid mistakes while filing ITRs:
1) There are seven ITR forms issued by the Income Tax department. The choice of the form used by taxpayers while filing returns depends on their source of income. For instance, not all salaried people come under the ITR-1 bracket which is the basic form. The number of forms also vary from year to year. If taxpayers fail to select the correct ITR form, the ITR filed will be termed as defective.
2) Keeping track of the taxable income and their various sources is a challenging task. Income may come in the form of fixed deposit interest, rental income from house property, savings account interest, income from short-term/long-term capital gains. Besides, while certain incomes are tax-free, some incomes allow deductions and exemptions.
3) Taxpayers earning up to Rs 1.5 lakh per financial year can save tax by investing in various financial products or by choosing expenses like payment of child’s tuition fee. This is possible as per Section 80C of the Income-tax Act, 1961.
Many a time, taxpayers are not aware of the eligible deductions available under Section 80. So, this becomes a problem during tax-saving calculations while filing returns.
(Also Read: Taxpayers Can Now File Income Tax Return Via e-filing Portal ‘Lite’)
For instance, any contributions made by an individual to the National Pension System (NPS) of Rs 50,000 (over and above the limit of Rs 1.5 lakh) can be claimed as a deduction.
4) Taxpayers must note that the Tax Deducted at Source (TDS) must be the same in Form 26AS and Form 16 or 16A. The challenge arises when details get mismatched on several instances. For example, The TDS mentioned in Form 26AS may not match with that of Form 16 if the employer fails to deposit the amount with the tax department on time. The ITR filed will then be incorrect and rectifying the issue can be difficult.
5) If a taxpayer has switched jobs during a financial year or invested regularly in tax-saving products, then it will be challenging to file returns with multiple Form 16s. The taxpayer must not only collect Form 16 from the current employer but also from the previous employer/s.
6) The taxpayer must carefully fill in their personal details such as their name, phone/mobile number, date of birth, address, email ID. Notably, these details must match with the individual’s PAN (permanent account number).
The late date of filing ITR for the assessment year 2019-20 has been extended by the Central Board of Direct Taxes (CBDT) from July 31 to August 31, 2019.