The time has come, now it’s your duty as a responsible citizen of India to file the return, let have a look at how the returns can be submitted properly while preventing certain some common errors.
Avoid mistakes when filing Income-tax return – 5 common mistakes
Earning outside India
We are quite well informed that in terms of our salary taxes we earn a Form 16, and we will need to include such a benefit in our tax return. So what if a taxpayer has been working outside India for a quarter of the year his employer has been a foreign company? In such a scenario, the foreign corporation will not send a Form 16, but really the taxpayer would have to estimate revenue from his foreign tax tax return / foreign payslips / foreign tax paid certificate and submit the same in his Indian tax return. If taxes were paid outside India, the foreign tax credit could also be claimed on the grounds of the foreign country’s tax return,
Residential properties
With starting from the 2019-2020 FY, up to 2 residential properties could be deemed self-occupied and, thus, tax-free. Even so, if a taxpayer owns over two unleased residential house assets, the taxpayer would be allowed to tax the extra house properties as considered to be released and to provide notional rental income for all those assets.
Capital gains
Usually, a taxpayer browses his bank statements to review and confirm that any money he has earned over the year is adequately recorded in tax returns. Although this is a good idea, it does not represent money that was not paid into the bank account but was reinvested. For example, the bank account will display the profits of redeemed mutual fund units over the year but the swap-outs from one mutual fund to another mutual fund do not represent in the statement. A switch-out is indeed a taxable case, and the income, if any, must be properly provided for tax purposes even though it is not earned on the bank account.
Clubbing of income
It is normal practice for parents to invest money on behalf of their children or to invest funds on behalf of their spouse on behalf of a working adult. Profit from capital invested from the assets of a taxpayer in his possession in the name of his spouse or minor children is taxable. For example, interest from FD or capital gains via sale of assets acquired by the taxpayer in the name of a minor child or spouse, must be presented for tax in the taxpayer’s tax returns.
In fact, any income earned by a minor child will be clubbed into the pockets of the parent earning a greater taxable income, if the profits generated by the minor child may be related to his or her skills , abilities, or advanced expertise and experience. The parent, per child, has an exemption of Rs 1500 in regard of these club-bed income.
Failure to e-verify / send signed ITR to CPC
E-filing a tax return requires a double process: submitting the return (i.e. the xml file) to the income-tax database and subsequently e-verifying the return. E-verification can be achieved using one-time passwords based on Aadhaar or net-banks. Additionally, they may submit the signed ITR-V to CPC Bengaluru. Inability to review the tax return electronically will result in it being viewed as null and void.
Failure to deliver tax revenue will lead to tax, interest, and penal implications. And this additional degree of caution for such income products will save a lot of time besides interest and fine.
