Filing Income Tax Returns (ITR) is an annual ritual for millions of taxpayers across India. It's a crucial responsibility that ensures compliance with tax laws and keeps one's financial affairs in order. In our quest to meet the deadline and navigate the intricacies of the Indian tax system, we often unintentionally make mistakes that can have delayed processing to legal hassles.
We will shed light on four of the most common mistakes made while filing ITR. These errors, significant impact on your tax liability, financial well-being, and even your peace of mind. So, whether you're a seasoned taxpayer or filing your ITR for the first time, It's time to take charge of your tax return and make your financial life a little less taxing.
Filing ITR, Avoid These 4 Common Mistakes
1. Selecting the Wrong Form:
- India has several ITR forms, each designed for different categories of taxpayers and types of income. Selecting the wrong form can lead to errors and processing delays. Here's an overview of some commonly used ITR forms:
a. ITR-1 (Sahaj):
For individuals with income from salary, one house property, other sources, and having total income up to ₹50 lakh.
b. ITR-2:
For individuals and Hindu Undivided Families (HUFs) not having income from profits and gains of business or profession.
c. ITR-3:
For individuals and HUFs having income from profits and gains of business or profession.
d. ITR-4 (Sugam):
For individuals, HUFs, and firms (other than Limited Liability Partnerships) having presumptive income from business or profession.
e. ITR-5:
For firms, Limited Liability Partnerships, Association of Persons (AOPs), and Body of Individuals (BOIs).
f. ITR-6:
For companies other than companies claiming exemption under Section 11 (Income from property held for charitable or religious purposes).
g. ITR-7:
For persons, including companies, required to furnish return under Section 139(4A) or Section 139(4B) or Section 139(4C) or Section 139(4D) (i.e., trusts, political parties, institutions, etc.).
- It's crucial to choose the correct form that aligns with your income sources and status.
2. Understanding Assessment Year and Previous Year:
- The "Assessment Year" (AY) is the year in which your income is assessed and taxed. For example, if you are filing your returns for income earned in the financial year (FY) 2022-23, the AY would be 2023-24.
- The "Previous Year" (PY) is the financial year in which you earned income. Using the same example, FY 2022-23 is the PY for AY 2023-24. It's important to be clear about these terms to avoid confusion while filing.
3. Deduction under Sections 80C and 80D:
- Sections 80C and 80D are related to deductions for investments and expenses, respectively:
a. Section 80C:
This section allows deductions for investments in specified financial instruments such as Employee Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificates (NSC), and life insurance premiums. It does not pertain to capital gains.
b. Section 80D:
Section 80D provides deductions for health insurance premiums paid for self, family, and parents. Again, it's unrelated to capital gains.
4. Checking the Entire ITR Form Before Submitting:
- This is a critical step to avoid errors. Ensure you've filled in all relevant details accurately, including personal information, income sources, deductions, and exemptions.
- Review your calculations and cross-verify with supporting documents, such as Form 16 from your employer, bank statements, and investment proofs.
- Any discrepancies or omissions can lead to complications, including tax notices and penalties.
In conclusion, selecting the correct ITR form, understanding assessment year and previous year, and correctly associating deductions with the relevant sections are essential to avoid mistakes while filing your income tax returns in India. Additionally, thorough review and accuracy are crucial to ensure a smooth and error-free filing process. Filing ITR, Mistakes
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