Albert Einstein had once said that the hardest thing to understand in the world is income tax.
Most taxpayers would undoubtedly list filing of an income tax return (ITR) as a close second. Tax payers wait for the deadline to file ITR and eventually file it in haste,because of which mistakes are bound to occur. Here is how to avoid them.
Select relevant ITR: First and foremost,select the correct and updated form of ITR. Eight different types of ITRs are notified by tax authorities based on the type of the taxpayer and their sources of income.
For the FY12,e-filing has been made mandatory for individuals or a HUF,where total income exceeds R10 lakh. Last year,it was only for individuals or a HUFs,where total income exceeded R40 lakh.
Disclose all incomes: While most salaried taxpayers seek to disclose only their salary income,it is important to report income for other heads,such as savings bank account income (the deduction up to R10,000 is only applicable from FY13),income from stock and shares,additional house property etc.
Itns all about paying taxes. It is also important to report and carry forward your losses to be eligible to claim them in the subsequent year.
Crunch numbers and pay dues: Tax slabs are impacted depending on if you are a resident/non-resident individual or male/female,so calculate your taxes based on the applicable slab rates and special rates if applicable.
Do check the TDS and advance tax credit available against your PAN in your 26AS on the income tax website. Should your tax computation lead to a tax liability over and above your TDS and advance tax credit available,ensure prompt payment along with applicable interest.
Ensure mentioning correct basic details like PAN,e-mail address,communication address,phone number etc. Special importance must be warranted to the bank details if you are looking for a tax refund.
Filing ITR on time: Make sure you file your ITR within the due date.
Delayed ITRs cannot be revised later,even if you realise some mistake. Filing on time becomes extremely important for people having tax losses,otherwise the benefit to carry forward these losses to offset future income is lost.
The importance of filing correct and accurate returns cannot be any less emphasised. Neglecting to pay attention to details can end up making taxes even more costly or delays in refund. While,some of these mistakes would end up in you getting a notice from the tax authorities,others would expose you to risks of heavy penalties and punishments.
While the department has simplified the entire process to the adage Pay tax Relax,most tax payers may not agree. Keep in mind the above mentioned guidelines and,if in doubt,always consult.
The writer is senior tax professional,Ernst & Young. Views expressed are personal