Income tax is one of the most crucial aspects of an individual's life, as it not only affects one's own fiscal reputation but also impacts the larger system and economy that they happen to be a part of. Therefore, it is rudimentary to file your income tax return with accuracy, neutralising any potential error.
Here are 5 common mistakes, that a diligent taxpayer should avoid while filing their Income Tax Return or ITR.
Providing Accurate Information
First things first, it is often smaller, seemingly minuscule, and innocuous mistakes that could result in something more severe. Therefore, it is essential to weed out these mistakes. One of the most common errors that is often noticed is the erroneous filling of basic details/information.
When you fill out the form, be careful about the details about your name, address, and employment details. An inaccurate filling of the form could lead to rejection of the ITR, resulting in one having to go through the process again.
Banking Details For Refund
Another basic or fundamental yet imperative element that often results in mistakes, and tax payers suffer the ramifications of it. A fault in entering the right banking detail fo your 'Active Account'.
A mistake in that could impact your chances of attaining a refund from the IT department. Getting basic details, including your IFSC code, account number, and other details, is essential for smoother functioning.
Here, apart from the 'Active Account', which is an account that you use, you also need to disclose the other bank accounts you have.
Clubbing Your Offspring's Earnings
Now we move to much more granular areas of ITR. Often, taxpayers fail to provide the right details regarding the earnings or gains made in the name of their children. May it be interest from a fixed deposit or any equity investment done in your child's name, the parents are expected to club that with their earnings to pay the accurate tax under Section 64 (1A) of the Income Tax Act 1961.
Here, in the case of two earning parents, the parent in the higher tax bracket is expected to club the gains into their income.
In the case of any investment or, in some scenarios, while shunting from one mutual fund to another, some capital gains are not reflected in the bank statement of the individual; therefore, this ends up not being mentioned in the details while filling out the form. | Image Source: Wikipedia (Representative)
Disclosure of Capital Gains
In the case of any investment or, in some scenarios, while shunting from one mutual fund to another, some capital gains are not reflected in the bank statement of the individual; therefore, this ends up not being mentioned in the details while filling out the form.
It is crucial to update and fill in accurate and current details regarding the source of the benefit.
Updated Information on Employment
In a financial year, if an individual switches from one job to another, before filing the ITR form, one is expected to diligently mention the details of the gains or earnings attained from the previous job that the individual carried out, in addition to the details of the current job and the income attained from it.
Therefore, it is essential to procure Form 16 from both your organisation, which includes your current and former companies.
Please consult a trained professional for better understanding of the taxation system
