ITR Filing: Don’t make these mistakes to avoid getting a tax Notice

Last Updated at: January 03, 2020
470
ITR Filing: Don’t make these mistakes to avoid getting a tax Notice

The due date for filing the Income-tax return (ITR) for the  2017-18 financial year is 31.08.2019 and the form for filing the return has been issued by the Central Board of Direct Tax. In ITR form applicants have to mention in detail about the expenses, income, liabilities, assets in addition to other relevant tax information and file it with the Income Tax Authority of India. With the help of an ITR form, applicants are able to calculate their Income tax liability, schedule tax payments and in case of any overpayment of tax, then request for refunds.

It is to be noted that even if the taxpayer has paid the tax but has not filed the ITR form he would be penalized as filing the ITR form is a mandatory requirement. Filing of an ITR may seem to be a dreary process for individuals who are have had huge investment in the financial year under consideration as the documents involved are lengthy and technical, which results in them making mistakes and further complicating the process. Hence, the taxpayer should take utmost care in filing the ITR as even a small mistake may penalize and attract penalty from the department.

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One of the major reasons for mistakes in ITR filing is that the rules, procedure, format, etc keep changing from time to time. Hence, to avoid getting tax notice to avoid these common errors while filing the ITR form:

  1. File the ITR form even if Tax has been paid: People are under a wrong presumption that if they have paid the tax then they are not liable to file the ITR. However, the same is not true. If you are an Indian citizen and where your gross total income is more than Rs 2.5 Lakh before any deduction, then it is mandatory to file the ITR. For senior citizen whose age is above 60 years, the limit is Rs 3 Lakhs and for citizens above the age of 80 years, the limit is Rs5 lakh.

However, it is to be noted that the assessee who is a resident of India but holds assets or any financial interest in entity which is located outside India or he/she is having a signing authority in any account located outside India then  in such cases he/she cannot file the return in ITR-1 form.

  1. Filing Return in the wrong ITR form: There are 7 types of ITR form and the assessee has to choose the correct form in accordance with his income and status. Disclosure requirements are different are the forms available and hence it is on the assessee to take suggestions from experts and then fill the form. In case of error, the department will return the form as defective and will ask to refill within a stipulated time. From the assessment year, 2018-19 changes have been brought to separately mention details about the ‘income from other sources’.
  2. Not informing about all Income sources: Income Tax department as aware of all the financial transaction done by the assessee as they are getting regular information from the banks and other financial institutions. Therefore, it is advisable not to hide any profit, gain or any credit received while filing the form.  In cases where tax has been deducted from any income received and such income is not mentioned in the form, the assessee will get a notice from the department and will be asked to explain the reason for such non-disclosure.
  3. ITR not in harmony with form 26AS: Before filing ITR, the assessee should rectify and see in case of any discrepancy in form 26AS which mentions about the details of tax deducted (TDS) from your income and any refund received or any advance tax paid. If any TDS information is missing in the Form 26AS, the department would deny credit claimed in the ITR form and vice-versa. Hence, there should be sync in the ITR form and Form 26AS.
  4. Providing Incorrect personal information: All the information should be carefully filled, which includes: Name, date of birth, PAN number, email id, contact details and in case of any refund claimed then correct and all the information of your bank account should be correctly filed to avoid delay in refund.
  5. Not reporting the income received from previous employment: In case the assessee has switched his job then he/she is duty-bound to club the income received from previous and current employment. This might change the tax liability and bring the assessee in the different tax slab. In addition, there might be a TDS deduction in previous employment which needs to be mentioned in the ITR form. Hence, reconcile the income of previous year employment and fill the ITR form.
  6. Not disclosing about the foreign Income: To avoid money laundering, the government has taken strict measures and this covers disclosing of all the foreign assets and income in your ITR form. Depository and custodian and the two new sub-columns where the assessee has to mention the details of assets and account of which he/she is a beneficiary.
  7. Not aware about tax deduction: Even when the tax deduction has not been considered by the employer or there is a delay in submitting proof of tax deduction, the assessee can claim such deduction in the ITR form even when those deductions are not reflected in form 16 (tax certificate).

In case, the assess delays in filing the ITR he/she will be charged Rs 5000 as a penalty after 31st July till 31st December and Rs10,000 will be levied after 31st December till 31st March. The maximum penalty levied would be of Rs 10,000.

0

ITR Filing: Don’t make these mistakes to avoid getting a tax Notice

470

The due date for filing the Income-tax return (ITR) for the  2017-18 financial year is 31.08.2019 and the form for filing the return has been issued by the Central Board of Direct Tax. In ITR form applicants have to mention in detail about the expenses, income, liabilities, assets in addition to other relevant tax information and file it with the Income Tax Authority of India. With the help of an ITR form, applicants are able to calculate their Income tax liability, schedule tax payments and in case of any overpayment of tax, then request for refunds.

It is to be noted that even if the taxpayer has paid the tax but has not filed the ITR form he would be penalized as filing the ITR form is a mandatory requirement. Filing of an ITR may seem to be a dreary process for individuals who are have had huge investment in the financial year under consideration as the documents involved are lengthy and technical, which results in them making mistakes and further complicating the process. Hence, the taxpayer should take utmost care in filing the ITR as even a small mistake may penalize and attract penalty from the department.

Register Your Startup Business Now

One of the major reasons for mistakes in ITR filing is that the rules, procedure, format, etc keep changing from time to time. Hence, to avoid getting tax notice to avoid these common errors while filing the ITR form:

  1. File the ITR form even if Tax has been paid: People are under a wrong presumption that if they have paid the tax then they are not liable to file the ITR. However, the same is not true. If you are an Indian citizen and where your gross total income is more than Rs 2.5 Lakh before any deduction, then it is mandatory to file the ITR. For senior citizen whose age is above 60 years, the limit is Rs 3 Lakhs and for citizens above the age of 80 years, the limit is Rs5 lakh.

However, it is to be noted that the assessee who is a resident of India but holds assets or any financial interest in entity which is located outside India or he/she is having a signing authority in any account located outside India then  in such cases he/she cannot file the return in ITR-1 form.

  1. Filing Return in the wrong ITR form: There are 7 types of ITR form and the assessee has to choose the correct form in accordance with his income and status. Disclosure requirements are different are the forms available and hence it is on the assessee to take suggestions from experts and then fill the form. In case of error, the department will return the form as defective and will ask to refill within a stipulated time. From the assessment year, 2018-19 changes have been brought to separately mention details about the ‘income from other sources’.
  2. Not informing about all Income sources: Income Tax department as aware of all the financial transaction done by the assessee as they are getting regular information from the banks and other financial institutions. Therefore, it is advisable not to hide any profit, gain or any credit received while filing the form.  In cases where tax has been deducted from any income received and such income is not mentioned in the form, the assessee will get a notice from the department and will be asked to explain the reason for such non-disclosure.
  3. ITR not in harmony with form 26AS: Before filing ITR, the assessee should rectify and see in case of any discrepancy in form 26AS which mentions about the details of tax deducted (TDS) from your income and any refund received or any advance tax paid. If any TDS information is missing in the Form 26AS, the department would deny credit claimed in the ITR form and vice-versa. Hence, there should be sync in the ITR form and Form 26AS.
  4. Providing Incorrect personal information: All the information should be carefully filled, which includes: Name, date of birth, PAN number, email id, contact details and in case of any refund claimed then correct and all the information of your bank account should be correctly filed to avoid delay in refund.
  5. Not reporting the income received from previous employment: In case the assessee has switched his job then he/she is duty-bound to club the income received from previous and current employment. This might change the tax liability and bring the assessee in the different tax slab. In addition, there might be a TDS deduction in previous employment which needs to be mentioned in the ITR form. Hence, reconcile the income of previous year employment and fill the ITR form.
  6. Not disclosing about the foreign Income: To avoid money laundering, the government has taken strict measures and this covers disclosing of all the foreign assets and income in your ITR form. Depository and custodian and the two new sub-columns where the assessee has to mention the details of assets and account of which he/she is a beneficiary.
  7. Not aware about tax deduction: Even when the tax deduction has not been considered by the employer or there is a delay in submitting proof of tax deduction, the assessee can claim such deduction in the ITR form even when those deductions are not reflected in form 16 (tax certificate).

In case, the assess delays in filing the ITR he/she will be charged Rs 5000 as a penalty after 31st July till 31st December and Rs10,000 will be levied after 31st December till 31st March. The maximum penalty levied would be of Rs 10,000.

0

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A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.