A person who is Tax Payee has to keep a record of his/ her complete income along with the proof of all the Investments while filing Income Tax Returns. As we all know that, Tax Filing is very continuous and precise process. However, a lot of people file income tax returns on the last date. In order to maintain all the things properly, we suggest you to have a record of all the things on time. By doing this, you will be able to file the Income Tax Returns on time. Here, we will provide Top Mistakes to avoid while filing Income Tax Returns.
Mistakes to avoid while filing Income Tax Returns
- 1 Mistakes to avoid while filing Income Tax Returns
1. Paying Health Insurance Premium in Cash
According to the section 80 (D), it permits an individual to lower the taxable income by Rs 25,000 for non-senior citizens. A citizen can claim this deduction for Health Insurance Premium which are paid for self, spouse, children, and parents. Please keep in mind that the insurance should not be paid in cash, which means it should be paid by cheque, online, and so on. Due to hurry, many people make a mistake of paying in cash which then leads to paying higher tax despite having a health policy. One should avoid this in order to get Tax Benefits.
2. Documents not in Order
You should arrange all the documents properly in order if you don’t want to miss on declaring important financial transactions, which are eligible for tax benefit. While filing the Income Tax Returns, you should you may require these documents and hence you can represent them as a proof if any clarification is needed. At the time of filing ITR, you might also require important documents such as PAN Card, Aadhaar Card, Bank Account Statements, Investments, Salary slips, travel bills, etc.
3. Investing in Non-Tax Saving Instruments
Before making any kind of investments to have Good returns as well as to save tax, you should have a good knowledge of instruments in which you are investing. It is better to take an advice from a Financial Advisor for making investments properly. For instance, it is better to invest in ELSS for saving tax then to invest in SIP in an equity fund.
4. Waiting for Tax Saving Investments until the End Date
There are some people who are waiting for good tax saving instruments till the end date and then they make an investment in any tax saving instruments. By doing this, you might invest in inefficient tax saving product which leads you to a financial burden to arrange the fund. You should plan ahead of time and invest on money at the proper place. Due to this, you will be able to save more money.
5. Tax Saving Not in Sync with Financial Planning
There should always be synchronization between Tax Saving and Financial Planning. For instance, you require a certain fund to accomplish a financial goal after 2 years, but in order to save tax, you made a mistake to invest in PPF or NPS. Before investing in anything, you should check factors such as liquidity, risk, financial goals, etc.
In order to avoid this, you should focus on Tax-Saving Instruments at a certain period of time and avoid investing money at once. Also, pay income tax returns on time to avoid penalty. In case of any doubt, please contact your tax consultant.
Hence, all the tax payee’s are suggested to keep in mind these Mistakes to avoid while filing Income Tax Returns.