 "5 common mistakes to avoid while filing returns")
When going through tax filing process, it is important that all the correct details are filed and more importantly, in the right sections. Remember that any mistakes in the process could come back to haunt you at a later stage. And the penalties would include, besides monetary losses, a lot time and effort. Here are some common mistakes that are made often:
Inadequate information
A good example is for the salaried, there is the requirement in Form ITR 2 to mention the name and address of the employer. Many don't fill this. Similarly, in case of a house property, the owner has to mention the location of property. Often such sections are left blank leading to queries at a later date because the form does not contain all the necessary details. A little bit of homework is essential to ensure that all such information is given in a detailed manner.
A very important item, but ignored by many. Though the amount may be minuscule and may not sound relevant, it essential to mention it even if it is a few hundred rupees or less. However, this innocuous sounding amount has to be diligently accounted for because it comes under the income head. Hence, even if you fail to mention a small part of it, there will be a tax liability that will be outstanding against your name.
Declare capital gains
When investing through a systematic transfer plan or even switching between schemes, there are some capital gains that have to be declared to the authorities. The amount of the capital gains that do not come under taxation may vary, but care has to be taken lest it is construed as default at a later date.
Shifted jobs?
Sometimes when shifting from one employer to another during the financial year, you have to fill in two investment proofs to both the employers. In many cases, there is double benefit that comes to you for the same investments made because both the employers consider the same deductions (For example investments made under Section 80C) and provide benefit to the employee. The onus here is on you to check and ensure that there is no double benefit taken otherwise there will be a large liability that can arise in the future.
Inconsistency
In several cases, there is an inconsistency in the details provided while filing income tax returns. Like missing out on interest income from National Savings Certificates or showing investments that are not justified by the income earned. Some of these could be simple mistakes but would have to be explained property. For example, a large inheritance could have led to a large investment though the income earned during the year could be is rather low. In such a situation, unless the source of the funds for the investment is disclosed, there can be a high tax liability.
The writer is a certified financial planner
Inadequate information
A good example is for the salaried, there is the requirement in Form ITR 2 to mention the name and address of the employer. Many don't fill this. Similarly, in case of a house property, the owner has to mention the location of property. Often such sections are left blank leading to queries at a later date because the form does not contain all the necessary details. A little bit of homework is essential to ensure that all such information is given in a detailed manner.
Also Read
Not accounting for savings' bank interest
A very important item, but ignored by many. Though the amount may be minuscule and may not sound relevant, it essential to mention it even if it is a few hundred rupees or less. However, this innocuous sounding amount has to be diligently accounted for because it comes under the income head. Hence, even if you fail to mention a small part of it, there will be a tax liability that will be outstanding against your name.
Declare capital gains
When investing through a systematic transfer plan or even switching between schemes, there are some capital gains that have to be declared to the authorities. The amount of the capital gains that do not come under taxation may vary, but care has to be taken lest it is construed as default at a later date.
Shifted jobs?
Sometimes when shifting from one employer to another during the financial year, you have to fill in two investment proofs to both the employers. In many cases, there is double benefit that comes to you for the same investments made because both the employers consider the same deductions (For example investments made under Section 80C) and provide benefit to the employee. The onus here is on you to check and ensure that there is no double benefit taken otherwise there will be a large liability that can arise in the future.
Inconsistency
In several cases, there is an inconsistency in the details provided while filing income tax returns. Like missing out on interest income from National Savings Certificates or showing investments that are not justified by the income earned. Some of these could be simple mistakes but would have to be explained property. For example, a large inheritance could have led to a large investment though the income earned during the year could be is rather low. In such a situation, unless the source of the funds for the investment is disclosed, there can be a high tax liability.
The writer is a certified financial planner