With only a few days left for filing income tax returns by March 31st, it is essential for all taxpayers to be aware of the do's and don’ts of income tax filing so that they could avoid last-minute errors.
We are almost at the end of the tax filing season this year, with only a few days left for filing our income tax returns by March 31, whether belated or revised. It is, therefore, essential for all taxpayers to be aware of the essential do’s and don’ts of tax filing so that they could avoid last-minute errors. Here’s a list that will help you file your tax returns without any hassles this March:
DO’s: All the stuff you should absolutely do!
By organize we mean keep your documents ready at the go. If you haven’t yet done a spring cleaning of your desk drawers and segregated the useful from the useless pieces of paper, now is the time to get into cleaning mode. Once you are done being all Martha Stewart with your paperwork, separate the ones you will need for filing purposes which includes old tax receipts, receipts of income and investments, tax documents etc.
2. Check and then re-check your calculations
Unless you are John Nash, you better believe that your calculations can be wrong. Take the time to review your math and ensure that your calculations are correct.
3. Choose the right forms
Before you begin filing, be very clear about the FY and AY for which you are filing and choose the correct forms. Last-minute errors like filing your tax returns for the wrong date can cause much heartache later. So, beware!
4. Report all your income. Yes, all of it
When you look at the ITR form, you will see a section titled ‘Income from other sources’. Under this heading, it is important that you report all the income that you may be earning from sources other than your salary; such as rent from property, or capital gains from mutual funds or the stock market. Don’t forget to disclose this information as not doing this can lead to penalties later.
5. Verify ITR after E-filing
After you successfully e-file your income tax return, e-verify your ITR-V via Netbanking, Aadhaar Card or through the EVC process on your mobile number and email. It is important to verify your return because the IT department will start processing your returns only after they receive the verification. Or you can sign and send the ITR-V to the CPC via ordinary or speed post only. This has to be done within 120 days from the date of e-filing of tax return.
DON’Ts: The things you shouldn’t even think of doing
1. Making a mistake in important details
While you file your return, you will be asked to fill in many details such as your bank details (account number, IFSC code, name as per bank records etc.), PAN number, postal address and email ID, to name a few. Failure to add any of these details correctly can cause problems in the processing of your return or in receiving important communications from the tax department like refund cheque, error notices etc. Hence, verify the details you enter and ensure accuracy.
2. Not using the Section 80 deductions to the fullest
Want to reduce your tax liability? Use the deductions offered under the Section 80 carefully. And not having made any investments is not an excuse you can use because even if you were not able to submit proof of investment to your employer, you can still make last-minute investments using online portals and claim these deductions while filing the ITR.
3. Not reporting any exempt income
You do not have to be a rocket scientist to know that reporting exempt income in a tax return works to your advantage. By adding this income to your return, you would have done due diligence in that you would have disclosed all your income and yet you will not be paying anything extra. Income from dividends, PPF interest etc. fall under this category.
4. Mixing up Financial year (FY) and Assessment Years (AY)
One of the most common mistakes taxpayers make is to enter the details of one financial year against the other. This can cause complications in your return processing and in calculation of your tax liability. The delay caused by such mistakes can also cause you to pay penalties. So, ensure that you select and file your return against the correct FY/AY as the case may be.
5. Leaving return filing till the last minute
Don’t make the mistake of procrastinating and filing your returns at the very last moment. While online portals like ClearTax have simplified the process of return filing to a large extent, it is still highly likely that you may make mistakes while filing at the last minute and end up paying more taxes than necessary by procrastinating.
(By Archit Gupta, Founder and CEO, Cleartax.in)