ITR Filing for AY 2020-21: Filing Your Income Tax Return? Avoid these mistakes

Filing an income tax return (ITR) is usually the last thing on your mind in December. However, 2020 is not just any year. You’ve seen several unthinkable things in the past come true, and one of them is the extension of the ITR filing deadline.

A fiscal year that is generally completed before July 31 has already had two extensions, and now the deadline for ITR filing for the 2019-20 fiscal year has been set for December 31, 2020. While the COVID pandemic is the main driver of this change, which has not changed the mistakes that taxpayers make in this very important financial year. Let’s dive into common mistakes that are made and see how you can keep them at bay.

Misconception about filing ITR at all

A common misconception among people is whether they need to file ITR returns at all. There are many appraisers with an annual income of up to Rs 5 lakh whose tax liability is reduced to zero after the applicable rebate of up to Rs 12,500 under section 87A. However, many assume that this means not filing ITR returns at all. This is not true. If you are under 60 years old with a gross annual income of more than Rs 2.5 lakh in one year, then it is mandatory that you submit your ITR to the tax department. On the other hand, if you are between 60 and 80 years old and earn a gross annual income of more than 3 lakh rupees, then you also need to submit your ITR.

Those over the age of 80 with a gross annual income of more than Rs 5 lakh must also file returns. Please note that even if your income is below the exemption threshold, you must file tax returns if you have paid an electricity bill of Rs 1 lakh or more during the year or have spent Rs 2 lakh or more on travel to the Foreign.

ITR filing is also mandatory if you have deposited Rs 1 crore or more into a checking account or invested in assets in a foreign territory.

Hide interest income

This is another slip of the majority of taxpayers. Keep in mind that interest income from fixed bank deposits, small savings plans, and bonds, among others, is fully taxable. If you are not a senior citizen and the interest on fixed bank deposits exceeds Rs 10,000 in a financial year, the bank will deduct the TDS.

Many assume you take care of their interest taxes. However, it is a mistake. TDS is only 10% of income. If you are in the highest tax bracket, then your tax liability increases. Also note that if the interest income from all bank savings accounts is more than Rs 10,000 in one tax, you have to pay taxes on it. Therefore, it is essential to take them into account and also the report when submitting the ITR.

Error reporting capital gains

Reporting on capital gains is another area where mistakes are likely to occur. Their calculation is understandably a complicated process, as earnings from different financial instruments attract different tax treatment.

However, mutual fund houses have simplified the process to some extent, as they provide investors with a capital gains statement that separates short-term and long-term gains. By listing all transactions and earnings in a year, these statements also reflect the amount of tax after indexation. If you file your returns through a tax portal, all you need to do is upload it and the fields will be filled in automatically.
To calculate the earnings from the shares, you need a statement from your broker and for long-term earnings, you need to mention the details of the scrip.

Incorrectly archiving the new DI schedule

After the pandemic, the last date to make tax-saving investments for the 2019-20 fiscal year was extended to July 31, 2020. On income tax forms, Schedule DI allows taxpayers to claim exemptions on the investments they made during the extended period, until June 30. , 2020.

However, you should exercise extreme caution when filing it and mention only those investments that you want to consider for exemption in the previous tax, i.e. 19-20. Make sure you don’t end up putting in the details of the investments you want to consider for tax exemption in the current financial year (tax year 20-21).

summarizing

Filing ITR returns is not a complicated process, as long as you are familiar with the rules and changes. Otherwise, it is wise to seek the help of a professional who will help you file an error-free return for a nominal fee. Do not hide anything from the tax authorities, as doing so may cause problems for you.

(By Rahul Jain, Head of Personal Wealth Counseling, Edelweiss Wealth Management)