ITR FY2020-21: Avoid these 5 mistakes while filing your income tax return
New Delhi: The due date for filing income tax returns for AY 2021-22 has been extended by three months to December 31, 2021. While you have more time on hand, it’s best to start the process at the earliest – or as soon as the new income tax portal’s glitches are completely resolved. This will help you avoid the last-minute rush and errors that could creep into your returns.
Filing ITR is an important financial exercise. Here are some mistakes that you need to avoid while filing tax return:
1. Wrong ITR Form: There are different income tax forms prescribed for different types of taxpayers. ITR-1 (SAHAJ) is applicable only for resident individuals having income up to Rs 50 lakh and only for those having income from salary, one house property and other sources. ITR-3 is applicable for income from business or profession and ITR-4 (SUGAM) for the presumptive method of taxation such as for freelancers. Taxpayers should be careful while choosing the ITR form. A wrong form can render the tax return filed defective and the taxpayer may receive a notice from the tax department to file the return once again.
2. Not reporting all sources of Income: While filing ITR, it is important to take into account all sources of income whether, from previous or current employment or income from investments, FD interest rate income, savings account interest income, etc. and file it under the appropriate ITR form. If any income is not reported, then a discrepancy will reflect in the TDS certificate (Form 16) and Form 26AS. The tax department can send a tax demand notice asking the taxpayer to pay additional tax dues in this case.
3. Not declaring income from capital gains: ITR requires complete details of the sale of capital assets, purchase and expenses to calculate the capital gain. In case a taxpayer makes investments to claim capital gains exemption, the details of the investment and capital gains exemption have to be provided by the taxpayer.
4. Not clubbing minor’s income: In case the taxpayers have made any investments in their minor child’s name, they should include the income such as interest income from the same as part of the income. The clubbing of income is generally with the parent whose income is higher. Taxpayers can claim a deduction of up to Rs 1,500 per child up to two children.
5. Not verifying TDS details with Form 26AS: The form 26AS carries a summary of TDS and tax payments on the income such as salary, interest or sale of immovable property. Before filing ITR, one should verify the TDS and tax payments with form 26AS. Form 26AS can be downloaded from the income-tax e-filing website.