6 Mistakes to Avoid While Filing Taxes
Tax season is upon us with the deadline (31 December, 2021) approaching soon. Whether this is your first time filing your taxes or you are an experienced tax payer, making mistakes is not unusual. But these can be prevented.
To help you out, we’ve compiled a list of common mistakes that you can avoid. Check them out below –
1. Incorrect ITR Forms
Did you know that submitting the wrong form as part of your ITR is equal to filing an invalid or defective return? There are 7 types of ITR forms that can be used for varied purposes. For eg. if you receive income from capital gains, then regardless of the amount you must file ITR 2.
We understand this can be complicated, so ensure that you do your research thoroughly before actually filing your ITR.
2. Inaccuracies
Another common mistake is with respect to inaccuracies in the information provided. This could be regarding your taxable income, amount of deductibles, sources of income, etc.
Yes, it is hard to keep track of all your investments, payments, etc. but thanks to pre-filled and stored information, this process is easier.
Additionally, most transactions will be recorded and sent to your email address which is a good way to help you keep track of it.
3. Wrong Assessment Year
The confusion between your assessment year and financial year is not new and stumps even the most seasoned tax payer.
In summary, while both financial and assessment years begin on April 1st, your assessment year is counted as the year after the financial year. In other words, if your financial year is 1, April 2019 to March 31, 2020, your assessment year will be 1 April, 2020 to March 31, 2021. Essentially, you are assessing and paying your taxes for the previous year’s income.
Therefore, while filing your ITR, ensure that the right assessment year is chosen. If you are a newbie to filing taxes, here’s a quick beginner’s guide to help you out.
4. Not Verifying your ITR
Did you know that filing your ITR is only the first step? For you to complete the entire process, you will have to also verify it. You can either do so physically or e-verify your ITR by visiting the official income tax portal but ensure that this process is completed.
5. Bank Account Details for Refund
While you may not be eligible for a refund every single time, you will still have to provide your bank details just in case and it is essential that you add in the right details in this case.
If you have provided incorrect information, not only will you not get the refund but trying to rectify it is a cumbersome process.
6. Contact Details
Another rookie mistake is not providing relevant contact information. Most communication regarding your ITR will be sent to your email address whether these are updates or reminders.
You can also update your email address or phone number easily in the online ITR portal.
In Conclusion
The last day to file your taxes is 31 December 2021 which is just a few weeks away. Filing your taxes can be a cumbersome and confusing process which is why it is important to start early.
In addition to the above, you must also ensure that you are declaring all your sources of income and claiming deductions correctly. Filing your ITR is an important step as an Indian citizen and avoiding it can attract penalties. You can file your taxes online or you can take the help of a CA.
What are some of your tips and tricks to help make filing ITR easier? Let us know in the comments below.