Active Stocks
Wed May 29 2024 15:50:35
  1. State Bank Of India share price
  2. 822.95 -0.96%
  1. Tata Steel share price
  2. 174.20 -0.37%
  1. HDFC Bank share price
  2. 1,507.85 -1.48%
  1. Power Grid Corporation Of India share price
  2. 317.55 1.52%
  1. ITC share price
  2. 430.80 0.44%
Business News/ Money / Personal Finance/  Income Tax Return: 8 common mistakes to avoid for a flawless income tax filing
BackBack

Income Tax Return: 8 common mistakes to avoid for a flawless income tax filing

Tax filing can be complex, leading to costly errors. Seek advice from a seasoned CA to avoid common mistakes like selecting the wrong form, handling F&O transactions and more.

To prevent tax filing errors, consult with a knowledgeable CA.Premium
To prevent tax filing errors, consult with a knowledgeable CA.

Filing taxes may be a complicated procedure, packed with potential traps that can result in costly blunders and frustrations down the road. To confidently navigate this complex world, seek experienced advice. In this article, we'll look at several typical tax filing blunders and offer valuable advice from a seasoned Chartered Accountant (CA) to assist people avoid these problems.

Selecting the incorrect form: One of the most common mistakes people make is choosing the incorrect form to file their taxes. Each form is tailored to a certain sort of income and taxpayer profile, and using the incorrect form might result in mistakes and processing delays. CA expert advises taxpayers to thoroughly analyse the qualifying conditions for each form and seek professional advice if confused.

Also Read: Income tax return (ITR) filing 2024: How to show accrued interest on bank fixed deposits (FDs)?

Proper treatment of F&O transactions: Futures and options (F&O) transactions can be complicated, particularly in terms of tax treatment. CA urges clients to appropriately declare F&O transactions, including profits and losses, on their tax returns. Failure to do so may result in tax notifications and fines from the Income Tax Department.

Correct treatment of donations made: Section 80G of the Income Tax Act allows donations to charities to be tax-deductible. However, CA advises against claiming deductions for donations without adequate paperwork. Taxpayers should donate to qualifying organisations and acquire receipts to claim deductions.

Also Read: Is 80D Deduction the Only Way to Save Tax for Insurance Holders

Proper treatment of ESOPs: Employee Stock Ownership Plans (ESOPs), which include Restricted Stock Units (RSUs), provide particular tax problems for employees. CA emphasises the need to know the tax consequences of ESOPs, such as tax timing and share valuation. Taxpayers should seek expert guidance to ensure that their ESOPs comply with tax rules.

Calculation for two or more job changes in a year: Taxpayers who change employment often throughout a fiscal year must precisely compute their earnings from each employer for tax purposes. To minimise errors in tax forms, CA encourages clients to keep thorough records of their income from each employment, including salaries, bonuses, and perquisites.

Also Read: Tax efficiency 101: How to maximise income tax benefits on home loans

Taxation of cryptocurrencies and coins: Many authorities, including India, continue to be unsure how to tax cryptocurrency transactions. CA emphasises the necessity of seeking advice from tax specialists on how to approach Bitcoin earnings and losses. Taxpayers should keep accurate records of bitcoin transactions to comply with tax requirements.

Tax deducted from interest income: Many taxpayers fail to realise that tax deducted at source (TDS) on interest income, such as fixed deposits or savings accounts, is not required to be disclosed on their income tax return. CA recommends taxpayers reconcile TDS certificates with Form 26AS and report just net taxable interest income on their ITR.

Calculating capital gains from land purchase sale: The sale of land or property acquired on prolonged payment plans, such as those provided by municipal governments, necessitates careful consideration of capital gains tax consequences. CA suggests that you speak with a tax expert to appropriately assess capital gains, taking into consideration the prolonged payment term and any possible exemptions or deductions.

Also Read: Income Tax: Want to opt out of the new tax regime? Here is a step-by-step guide

Strategies beyond common mistakes

In addition to avoiding frequent tax filing mistakes, taxpayers should remain up to date on new tax law developments and modifications. Changes in tax rules, exemptions, and filing methods can have a major influence on tax liabilities and refund claims. 

Furthermore, taxpayers should use the income tax department's online filing platforms and tools to ensure easy and correct filing. It is also critical to keep detailed records of financial transactions, investments, and deductions throughout the year to ensure a simple tax file. 

By proactively educating themselves and being organised, taxpayers may ensure tax compliance and efficiently optimise their tax-saving methods. Consulting with a knowledgeable Chartered Accountant or tax expert can give vital insights suited to your specific financial position.

Why CA expertise is crucial?

Incorporating the knowledge of a seasoned Chartered Accountant into tax filing efforts is critical for a variety of reasons. For starters, a skilled CA has a thorough understanding of tax rules and regulations, assuring proper compliance and reducing the chance of errors or omissions. Second, a CA may give personalised advice based on an individual's financial circumstances, maximising tax savings and refunds. 

Furthermore, CA assistance provides peace of mind since taxpayers may rely on their experience to manage complicated tax issues efficiently. Finally, a competent CA acts as a trusted adviser, providing continuing assistance and direction throughout the tax filing process and beyond, resulting in a long-term partnership based on trust and dependability.

In conclusion, to avoid typical tax filing errors, you must exercise vigilance, be alert, and seek expert advice. Understanding the subtleties of tax legislation and receiving expert counsel when necessary allows taxpayers to confidently navigate the tax filing process and maintain regulatory compliance. Remember that when it comes to taxes, it's better to be cautious than sorry.

Pranjal Bansal, Partner A A P T & Associates, Chartered Accountants

 

You are on Mint! India's #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 14 May 2024, 09:01 AM IST
Next Story footLogo
Recommended For You