You might think that in these days of simplified filing of returns, you don’t need to collate all your tax deduction at source (TDS) papers, proof of advance tax paid and the like. But remember that while these documents are no longer required to be submitted with your tax return, they help you in filing your income tax return correctly.
Apart from collecting the right documents, what makes taxpayers apprehensive is the complexity of the forms and the fact that filling them incorrectly could lead to trouble. We highlight some common mistakes so that the next time you fill the tax return form, you are better prepared.
Know your return form
The return form applicable to each taxpayer is determined by the sources of income and the type of taxpayer. So, if you earn income from salary, pension or interest, the form applicable to you is ITR 1. If, however, in addition to the above sources you also earn rent or capital gains, or incur loss from house property or capital losses, you will need to fill ITR 2. So, you should start by assessing and deciding upon the form applicable to you.
Get your PAN right
The tax laws levy a penalty of Rs 10,000 for not quoting or misquoting PAN. The PAN is your tax identification number used for correspondence with the tax authorities and therefore declaring an incorrect PAN could cost you dearly. Always get this alphanumeric correct, not only at the time of filing your return but also while filling in the form for payment of advance tax or self-assessment tax.
Bank details matter
The bank account details include the bank account number, type of account (savings or current), and the bank’s MICR code. Declaring these fields correctly is crucial, especially if you are claiming a tax refund. This is because the tax refund is directly credited to your bank account.
Remember the TDS
The tax authorities have done away with the cumbersome process of attaching relevant documents with the forms. Instead, the forms have been made more exhaustive, which means that you have that much more to do to fill them correctly.
You will need to fill in all the details of salary earned and TDS by the employer (or interest earned and TDS on FDs) in schedules provided for the same in the return form. It is important to ensure that the schedules are filled in accordance with the TDS certificates issued by the employer and banks. Though TDS certificates need not be submitted with the return, keep them in your records for use as evidence at a later date.
Self-assessment tax details
In order to claim credit for taxes paid by you during the year (as advance tax) and after the close of the year (as self-assessment tax), you need to mention the details in the schedule provided. The details must include the amount of tax paid, name and branch of the bank in which the payment was made, the basic statistical return (BSR) code, the date of payment of tax and serial number of the challan. You must ensure that all these fields are complete; the tax authorities need the details to be able to match them database and accordingly allow credit of taxes paid.
Annual Information Return
The new return forms require taxpayers to make disclosures if their saving and spending exceeds specific limits. This includes bank deposits, purchase or sale of immoveable property, investments in mutual funds, use of credit card, etc. The disclosure helps the tax authorities verify details filed by the depository, registrar, etc in the annual information return, and therefore, should be accurate.
Carry forward of losses
There are schedules which require details of how losses have been set off and against which source of income, and if the loss could not be set off in a year, if it has been carried forward. To complete these schedules correctly, one needs to be aware of what losses are allowed to be set off from what income. For example, while house property loss can be set off against salary income, capital loss can’t be. The list of precautions can go on but to cut a long list short, be sure of your sources of income, investments and taxes deducted at source or paid by you during the year. Maintaining a file for your taxes and a calendar with tax due dates will go a long way in keeping your apprehensions at bay.
Shalini Jain is a senior tax professional with Ernst & Young.