Spend, Save and Invest Smartly
Deadlines…Deadlines…Deadlines….The talk is not about your job deadlines. It is about the deadline for filing your income tax returns. The deadline to file income tax returns August 31st is fast approaching.
But should just filing tax returns be your priority? Definitely not….You need to avoid stupid mistakes while filing your tax returns.
Avoid mistakes while filling Personal Data
You must avoid mistakes while filling your name, date of birth, PAN or TAN in the income tax form. You must fill your personal details such as email, mobile number or the mailing address so that all communication with the Income Tax Department takes place in a prompt manner. If you are a senior citizen take extra care to fill in your date of birth. Failure to do so might mean you fall in a higher income tax slab. This means higher taxes. If you are expecting an income tax refund, fill your bank account number and the IFS code properly. Income tax refunds today are through ECS (Electronic Clearing System), and not cheques. You definitely don’t want to be chasing the income tax department for your hard earned money.
You neglect to mention exempt income
You have sold the shares you have bought 2 years ago for a profit. You know that Shares/Equity mutual funds held for over a year and then sold, are exempt from long term capital gains tax (LTCG).Your income from selling these shares is anyway tax exempt. So why mention it while filing returns? Your brokerage house will send your investment details to the income tax department. It is best to disclose this income when you file tax returns.
Choosing the wrong form while filing taxes
There are a number of forms you use while filing income tax returns. You have to choose the right form while filing your income tax returns. This depends on your source of income. If you fill a wrong form then your income tax return is invalid.
You fail to report your child’s income
You may have made investments in your child’s name. These investments have earned an income. You have neglected to mention this income, while filing your tax returns. Your child is too young to earn his own income. The income from the investment made in your kids name, is clubbed with your income, or your spouse’s income (if he/she earns a higher income), and tax has to be paid as per the income tax slab you/spouse falls under. Your total income is inclusive of the income earned in your child’s name. You have to mention this income while filing your tax returns.
You try to claim tax exemptions twice
You have changed jobs in the same financial year. If you have jumped jobs, you will have more than a single Form 16, as you have been under more than a single employer, in the financial year. You are eligible for tax exemptions and deductions. These tax exemptions and deductions have limits. You have two Form 16s, as you have changed jobs in a single financial year. This shows the deductions and limit of exemptions twice. However you can claim exemptions and deductions subject to their limits, only once in a single financial year. You have to be very careful while filing income tax returns, as you have to fill in details of income from 2 different employers. Incorrect filing might result in a discrepancy while filing returns and you could get a tax notice.
You don’t Send ITR-V form Before The Deadline
You have finished filing your ITR online. This return is considered legal, only if the signed copy of the ITR–V form (Income Tax Return Verification Form) reaches the income tax office. This ITR-V must reach the income tax department, within 120 days of filing tax returns. You might have filed income tax returns, but forgotten to post ITR-V to the income tax department. Your returns are deemed invalid. Make it a rule to send ITR-V within the 120 day period as it takes only a few minutes to post.