(By Grover S & Company – Best CA Firm in Delhi-NCR)
Getting done with filing your Income Tax Return (ITR) isn’t limited to merely submitting a form which is the case for most of us. One small slip-up can catch attention of the Income Tax Department, even if you have no intention to conceal the truth and however your income is tax paid. Several salaried as well self-employed and freelancers often find themselves bungling up while filing IT returns in a hurry or blindly trust the pre-filled data or simply ignore minor details which eventually gets blown into big issues.
Grover S & Company is one of the best CA firm in delhi ncr, However, did you know there are mistakes that we make while filing ITR that lead to notices from the tax department ASTHo everything changes a littlebit every year and so does IT return filing. There are some basic mistakes which people make, mostly out of ignorance which make them receive NOTICE.
Differences Between Form 26AS/AIS and ITR
Mismatch One of the most common reasons behind receiving notice is a mismatch in income and tax details as filed in your ITR compared to what is available in Form 26AS or AIS (Annual Information Statement). 26AS and AIS include information on TDS, high-value transactions and financial transactions related to your PAN.
In case the income declared in your return is less than what these documents show, or if TDS claimed does not tally — the system will flag your return for further verification. This routinely occurs when taxpayers overlook income from interest, capital gains or an additional employer. To prevent this, you must Retrieve the net-banking statement and Review Form 26AS and AIS before filing your ITR to ensure that all figures depicted in there are entered without any error in the return.
Failure to Report Partial and Total Gross Incomes
Several taxpayers believe that if TDS deducted on salary, they don’t need to think about small incomes. But the Income Tax Department expects you to report all income, whether tax has been deducted on its payment or if it offends the rule of smallness.
Typically neglected incomes are interest earned from savings and fixed deposit, recurring deposit interest, side freelance income as well as consultancy fees, rent received or capital gain from mutual funds and shares. Failure to report such transactions will cause income to be under-reported or misreported and will lead to notices, demands, and penalties. At Grover S & Company we make sure that the both primary and secondary incomes of each client are aptly declared in the ITR to avoid any hassle later on.
Incorrect Selection of ITR Form
Picking the wrong ITR form is yet another blunder that may render your return defective. For instance, those with salaried income and capital gains or who own several house properties could erroneously be filing ITR-1 instead of ITR-2. Likewise, a Freelancer or Consultant could wrongly file under a form designated for salary-only income.
If you use an incorrect form, your return may not be able to accomodate all the details and schedules it needs. This may be cause of notices or treating your ITR as invalid till the time the same is not rectified. It is recommended to know your source of income well and choose the right ITR form before filing. A professional CA firm such as Grover S & Company assists you in selecting the right form as per your income type and completely adhere to the latest regulation.
Overlooking high value transactions evident in AIS
The AIS has assisted the department in tracking high-value transactions like cash deposits, credit card payments, purchase of mutual funds, buying of property and shares or post-demonetisation. Most taxpayers are not even aware that the department have visibility of these transactions and believe they can be disregarded in the return provided no tax appears immediately due.
But if the AIS reflects large investments or spending not commensurate with your disclosed income, it might raise eyebrows and prompt a notice asking for an explanation. For instance, if you report modest income but have substantial mutual fund investments or acquire property, the department may want to know how you financed these transactions. To avoid this, ensure that you keep/maintain proper records for such transactions; link the transaction with declared income, and declare gains or interest wherever applicable in ITR.
Making improper deductions or claiming too many exemptions
There are a few reasons some taxpayers claim deductions or exemptions they don’t qualify for, and overstate amounts to drive their tax bill down. This could be in the form if inflated HRA claims, fake rent receipts, donations not actually made or deductions under Section 80C and 80D without adequate proofs.
With better matching of data, and strict scrutiny to match that follows, such false claims can very well come under the scanner with consequences like disallowance of those deductions, additional tax demand or even penalties. A smarter strategy would be to take only such deductions for which you have authentic documents and valid eligibility. Grover S & Company we check each and every deduction claim thoroughly since a clean and defend-able ITR is the goal.
Not Checking ITR After Submission
Too many taxpayers seem to have the idea that once they push “Submit” their work is done. But filing is not complete until the ITR is verified in due time. Your return can be treated as invalid if you don’t e-verify it through any of these channels — Aadhaar OTP, net banking (only account holders who have registered themselves), EVC (electronic verification code) or sent a signed physical copy to CPC.
If a return is not filed, it’s as good as unverified. This may cause you to lose your refund, penalties for late filing and issues in future years. Check your ITR after you file Your ITR must always be checked as soon as it is filed. If you are working with a CA firm such as Grover S & Company, they help to take it to end-to-end completion including verification in ITR status updates as “Successfully e-Verified”.
How to File ITR with Mis-Match Persona and Bank Details
Mistakes on your returns such as the wrong name, incorrect PAN, wrong IFSC code or bank account number may not directly result in a notice, but they can delay refunds and lead to avoidable harassment. When personal information is not serving us here, we may pose questions from the Department or mistakes in communication.
Verify Name as per PAN, residential status and address, mobile number, email and bank account details ( for refunds ) before submitting the return. Errors in calculation thus other problems can be easily prevented simply by ensuring that such things are accurate and current within the e-filing gateway. Grover S & Company will always double-check client details to avoid such simple, yet expensive errors.
5.2 Past year losses and set-off thereof are neglected
If you have made any capital loss, business loss or speculative loss in the previous years and same has been correctly disclosed and filed in income tax returns on due time you are entitled to adjust them against your current year income. But many taxpayers fail to claim these set-offs or they show them in an incorrect manner, resulting in mismatched or non-claim of tax benefits.
Although that won’t always provoke a notice, you’ll pay more tax than is necessary. What’s more, making false reports can create confusion when the department reconciles your prior returns. It’s essential to keep accurate records of any carried forward losses and to take them properly in the current year. At Grover S & Company we examine past-year returns to be sure that all the potential losses are offset so you can maximise your tax return and have spotless records.
Filing After the Due Date or Ignoring Department Notices
Late filing of your ITR escalates the possibility of errors in the rush to submit it while also leading to late fees and interest. Also, if you receive any instruction/communication from the income tax department and decide to turn a blind eye towards it, situation can worsen amounting in penalties/notices – with more of tax demands to follow and much more complicated action!
There’s always a rationale, and a deadline, behind any notice. It’s essential to reply accurately and promptly in order to help sort out the problem without any hassle. An expert CA firm such as Grover S & Company can assist you to comprehend the notice, draft a perfect reply and submit it on portal within the stipulated time period so that the case settles at this stage only.
How Grover S & Company Helps In Not Receive Notices On ITR
The ideal solution to prevent ITR-related notices is to file a true and faithful return each year. Grover S & Company, the best CA firm in north Delhi also known as the Best CA firm in Delhi-NCR follows a step to step approach with all its clients. We begin by gathering all relevant documents such as Form 16, Form 26AS, AIS, bank statements, investment proofs and business-related records.
We then match all the details of income and tax credit, verify form ITR as applicable, rest the basic information and compute correct tax liability after computing eligible deductions and exemptions claimed by you. At the outset, we prepare and process the return from our end ON-LINE and assist with any communication that may be received by you for ITR related matters. This total professional method sharply decreases mistakes and notices.
Bottom-line: File the Smart Way, Stay on the Right Side and Get Out of Notices.
The vast majority of ITR notices have nothing to do with fraud and everything to do with carelessness, not taking the time to be clear, small differences between what you file and what is on the system. By knowing what to avoid and doing a little preventive care, you can safeguard your tax record from errors.
If you wish to efile ITR correctly, want to receive or avoid notices and are willing for total compliance then an association with a professional CA firm helps. Grover S & Company in North Delhi can assist salaried individuals, business owners and freelancers prepare and file accurate returns on time every year.