Income Tax Return 2019: With the deadline to file Income Tax Returns for AY 2019-20 just round the corner, most tax payers must be in a rush to file their ITR on time. This process of filing income tax returns can prove to be a cumbersome affair, especially for first timers. As part of the government’s plan to widen the base in the country, it has directed IT department to add 1.3 crore new return filers in FY 2019-20. And if you are amongst the newly-added tax filers during FY 2018-19, make sure you do not commit the following mistakes while filing your ITR for AY2019-20:
#1- Choosing incorrect ITR form
For tax payers, especially first timers, it’s extremely crucial to choose the right ITR form while filing income tax return, and also remain updated regarding changes in the form, if any. For instance, for FY 2018-19, the CBDT has introduced a set of changes in ITR-1, with major change being the inapplicability of ITR-1 for director in a company and for those individuals who have held unlisted equity shares during previous year. For filing returns for FY 2018-19, such individuals would need to file ITR-2 instead of ITR-1.
Broadly, ITR 1 to ITR 4 are applicable to individuals and HUF, whereas ITR 5 to ITR 7 are applicable to firms and companies. Hence, before filing your return, make sure you have chosen the right ITR form amongst the seven forms available. Choosing an incorrect ITR form can result in rejection of your filing by the assessing officer leading to hefty penalties and even imprisonment in extreme cases.
Additionally, non-filing of income tax returns before the due date attracts a penalty that could be up to Rs 10,000.
#2- Not knowing the available tax reliefs
As deductions available under various sections may keep on changing from time to time, it is imperative for tax payers, especially first time return filers, to keep themselves informed as well as updated regarding any changes, in order to avoid missing out on benefits while computing their taxable income.
Apart from well-known deductions such as deduction on interest as well as principal repayment of home loan under section 24b and 80C of the I-T Act, respectively, and deduction under section 80E for interest paid on education loan, there are a number of other tax reliefs that are lesser known to tax payers. These include deduction of up to Rs 1.25 lakh for medical expenditure of severely disabled dependent (section 80DD), deduction interest earned on savings account under section 80TTA, deduction on donations made to specified institutions, funds, temples, political parties (under Section 80GGA, 80G, 80GGC) etc. It’s important for you to be aware of all available options before filing ITR.
#3 – Forgetting verification of return filed
While filing your return, remember that uploading of return of income alone does not complete the process of return filing. Verifying your return is a mandatory move in order to complete this tax filing process. The Income Tax Department would start processing your return once it is verified, and refunds, if any, are processed only for returns that have been submitted and verified.
You can choose to either e-verify your return or opt for physical verification. Numerous ways for e-verification are available, such as Net-banking, Aadhar OTP or by using EVC (electronic verification code) on mobile and e-mail. If you opt for physical verification, you need to download the return filing acknowledgment i.e. ITR-V(Income tax return verification form), and send the signed hard-copy of the same to the CPC (Centralized Processing Centre), Bangalore, for processing your return.
Irrespective of the mode you opt for verification, make sure you get it done within 120 days of filing the return, and failing to do so would result in your return being termed as invalid.
#4 – Incorrect computation of taxable income
Before filing your income tax return, it is extremely important to correctly identify and compute your taxable income. To ensure that you do not miss out on any income received, including exempt income such as agricultural income, download form 26AS from the TRACES (TDS reconciliation and correction enabling system) website. The form will reflect the taxes actually received by government. Information in Form 26As along with Form 16 will help salaried individuals and pensioners fill their tax conveniently. In case you fail to disclose any income, you can get a show cause notice, which can lead to hefty penalties in case you are unable to provide adequate explanation.
Remember that apart from review and analysis of relevant documents, such as pay slips, P&L statement, balance sheet, Form 26AS and Form 16, you also need to identify and segregate your source of income into different heads while filing your return — income from salary (including basic salary, commissions and bonuses, allowances, etc.), income from house property, profits and gains of business or profession, capital gains, agricultural income, and income from other sources.
(The author is CEO & Co-founder, Paisabazaar.com)