Income Tax Return: The last date of filing ITR (Income Tax Return) for assessment year 2020-21 has been extended till 31 December 2020 and for those whose accounts have not been audited, it is 31 January 2021. However, it is very important to pay attention while filing your tax return. Many people are in a hurry to file ITR and they make some mistakes, which they have to pay. You can also get a notice in this regard from the Income Tax Department. Let us know what are the mistakes that taxpayers should avoid while filing returns.
Using the wrong ITR form
Every year the Income Tax Department notifies many tax return forms for the convenience of taxpayers. These forms depend on their income, type and residential status. However, it is generally seen that many taxpayers choose the wrong ITR form while filing their returns.
For example, a person whose total income is less than Rs 50 lakh and has a house property, no income from capital gains, can use ITR1, which has now become a simpler form. However, most people mistakenly file ITR 2 which is complex and requires more details.
If a person chooses the wrong ITR form, then there is a possibility of not having complete information in the ITR and the tax department can issue a notice to reduce the income.
Paying tax for incorrect assessment year
The other common mistake that most people make is to pay tax for the wrong assessment year. This keeps paying tax for the current year, while paying more tax for the second year. Therefore, the person should take care in choosing the right year while paying tax.
Do not tell the investment income
The taxpayer should give income details from all his investments. This includes interest income from fixed deposits, capital gains from the purchase of mutual funds. People usually forget to tell the interest earned from savings bank account, fixed deposit, recurring deposit etc. The person also has to know about LTCG coming from the sale of equity shares and equity mutual funds and pay taxes. Similarly, interest on fixed and recurring deposits is also fully taxable.
Donation, not claiming benefit of tax saving channels
Many people also make this mistake in general. During the year, many taxpayers make many such investments or donations, which they forget to keep in mind. An easy way to assess this would be to analyze your bank statement in detail where these records will be available.
Exempt income details
Under the Income Tax Rules, it is necessary for the taxpayer to give details of all his income, whether it is exempt or not. It is mandatory for a taxpayer to file his ITR, if his total income exceeds Rs 2.5 lakh or if the total income is less than Rs 2.5 lakh, then he also fulfills some of the conditions stated under the law.
Under the Income Tax Act, there are many cases where the taxpayer needs to combine the income of his minor child or spouse with his income and pay the tax accordingly.