Even though tax season generally coincides with monsoon, unlike the latter, the former is not a season that taxpayers look forward to. This is because filing income tax returns is a taxing process. No pun intended.
Taxation by itself is complex. For the layman, it gets even more so when they have to file their income tax returns. The ITR forms are complicated, there are several fields that need to be filled in and nomenclature that needs to be understood. One mistake in any of the fields and the entire returns can go awry.
But there are some basic challenges that taxpayers face that can lead to mistakes. Here are 7 of them:
Entering the correct details manually
The ITR forms carry a number of rows and columns that need to be filled out at the time of filing one’s income tax returns. The details have to be entered in a particular format, which if not done properly can lead to errors in the returns. For example, dates have to be entered in the DD/MM/YYYY format only. If the date is entered in any other format, the returns would be incorrect.
Correct computation of income
Taxpayers need to compute their income accurately, including income other than salary. This additional incomes can be from sources like savings account interest, fixed deposit interest, rental income from house property, income from short-term capital gains, etc. These incomes have to be included and entered in the relevant fields in the ITR forms.
Mismatch in details of TDS
Often, details of tax deducted at source end up being incorrect because TDS is deducted not only from salary but from other incomes as well. If the details entered in the ITR forms do not match with the government’s data, the filed returns would be incorrect. Taxpayers can look at their tax credit statement (Form 26AS) to verify the TDS deducted from different sources.
Forgetting login password
Since income tax filing is something that a taxpayer has to do only once a year, people tend to forget the password for their accounts. In such cases, they have to reset their passwords to be able to e-file their tax returns. Even then, to reset their password they have to answer a secret question and answer, which is also something that people tend to forget.
Different Form 16s because of changed jobs
Whenever a taxpayer changes jobs, they end up with different Form 16s from each employer at the time of filing their tax returns. Filing returns with multiple Form 16s can be tricky and taxpayers are often not sure about how to do it.
HRA not being given by employer
If an individual doesn’t submit the rent receipts with the company HR, he or she won’t be able to get house rent allowance. Often, taxpayers are not aware that they need to have their landlord’s PAN to avail the HRA benefit. Furthermore, calculating the applicable amount of HRA is also tricky.
Calculating how much deductions can be claimed
Taxpayers are allowed to claim deductions of up to Rs 1.5 lakh in a financial year by way of certain investments and expenses. But how much can be claimed from what source is a tricky thing to figure out. Often, taxpayers are also not aware of some expenses that are eligible deductions.
These are the 7 common challenges that taxpayers face while filing their income tax returns. Most of them are easy to face once the taxpayer has adequate knowhow about income tax returns and how to file them.
This article was published on Yahoo Finance on 28 July 2016.