Avoid common mistakes to relieve tax-filing pain

For example,if one has switched jobs during the year,both employers will give benefit of basic exemption and deductions to the employee and,hence,lower TDS will be deducted. If you do not report income from your previous employer in the tax return,you could get a notice from the I-T office when the TDS data is reconciled with your return data.

An estimated 30% of tax returns have some mismatch with 26AS. Many taxpayers have started taking benefit of automatic matching of ITR data with 26AS data through Verified ITR services. So,one must file only verified tax return where your ITR data is matched with the database of the I-T department.

Not filing return at all

Every individual has to file return— before allowing any deduction—if the income exceeds the exemption limit (R2 lakh for every individual other than senior citizens). So,a taxpayer having an annual income above R2 lakh should file return even if he can claim the entire R2 lakh in deductions.

Not reporting bank interest income

It is a misconception that either the interest income from savings or fixed deposit accounts is not taxable,or that tax has already been deducted on interest income by bank. In fact,banks only deduct 10% TDS on interest income,whereas you may be in the 30% tax slab. Non-reporting of interest income in income-tax return is a sure shot way to receive a notice from the income-tax department. So,always report your interest income in tax return.

Using incorrect ITR form

Filing the return in the correct ITR form is of utmost importance. Incorrect ITR form leads to a defective return notice and the return is deemed to be not filed. While some online tax filing portals automatically select the ITR form based on your tax data,it is always a good idea to know the changes that happen every year in the various ITR forms. Moreover,any individual earning more than R5 lakh per annum is required to file return only in the electronic format. If a paper return is accepted by mistake,it won’t be processed.

Providing incorrect email ID

Since all communication by the income-tax department is now done via email,one should make sure that a valid and functional email ID is provided in the return form. One should provide one’s personal mail id instead of the official one as it could be blocked on change of job or closure of the company. This can result in not getting communication from the I-T department and default in tax compliance.

Not reporting exempted income

Several incomes such as dividends and long-term capital gains on listed securities are exempt from tax. However,you must report these in your tax return since their details are provided to the IT department by companies and brokerage firms. In case exempt income is above R5,000,ITR 1 (Sahaj) cannot be filed.

*The writer is chartered accountant & CFO,Taxspanner