As a business person, you already know that starting a business and managing it, particularly with regard to tax reporting, are two different things. Precision and attention to detail are important when filing income tax. Taxes must be filed by the time limit if you want to steer clear of late filing penalties.
If you try to file your income tax forms when it’s already late, you will only get faulty work done. Making careless mistakes when filing your income tax can make you face consequences like fines and penalties. So, Income taxes, in particular, must be managed with care, as they have the potential to disrupt your company’s operations. This blog is here to assist you in steering clear of typical income tax pitfalls and explain how professional advice can save your business.
Here are the 5 common Income Tax filing mistakes to know:
1. Selecting the Incorrect ITR Form
You should surely complete and file the right ITR forms for the specific category your business belongs to, whether you are salaried or run a business. Sometimes, the income tax department will issue new or updated ITR forms that don’t match your income specification or have updated criteria. The income tax department will notify you or issue a defect notice if you choose to submit an incorrect ITR form. So, selecting the appropriate category and understanding which one you fit into are crucial.
2. Untimely Filing of Your Income Tax Returns
Another common tax return mistake is filing them late. It is best to file your taxes well in advance rather than at the last minute. Have your bank statements, dividend receipts, pay slips, and other paperwork on hand.
You will have to pay a penalty if you try to file your income tax returns after the due date is passed. If you do a late filing, it prevents you from taking advantage of the majority of the specific benefits. They include the ability to deduct losses from capital gains of your business or investment in the following fiscal year.
3. Missing E-verification Of Your ITR You Filed
You must e-verify your income tax returns after you have completed them. You could complete the online e-verification using your Demat Account, NetBanking, or an OTP based on your Aadhaar. The ITR acknowledgement receipt can be manually sent to CPC Bangalore in a signed copy via an offline or conventional method. Your filed income tax returns will be deemed invalid if you haven’t e-filed them within 120 days.
4. Not Reporting All Your Sources of Income
You will either be a salaried person, a working professional, or a company owner. But regardless, you should not forget to disclose all of your revenue sources. You should include your salary, company or professional income, interest on fixed deposits, capital gains from debt or equity investments, or any other form of income.
It is necessary to accurately fill out and report each income head. Any discrepancy or failure to disclose all sources of your income could put you under the notice and scrutiny of the Income Tax Department. This is because your income is connected to your PAN card, and all of your information is interconnected.
5. Mismatch of Tax Deduction And Income with Form 16 And Form 26AS
If you are an employee who receives a salary, Form 16 must be sent to you by the company before you file your taxes. You will also require Form 26AS in addition to Form 16. A comprehensive tax credit statement, Form 26AS, shows TDS deductions from several sources of income against your PAN number.
You could use your online income tax account to download the form. It is essential to compile your revenue as it appears on the forms before submitting your taxes. Please make sure there are no inconsistencies before entering the data. This could result in incorrectly submitted taxes if it is not monitored.
Why Your Business Needs A Tax Expert
Skilled auditors are important for your company because tax regulations are subject to periodic changes. If you attempt to manage complicated tax issues using your business employees, you will only create costly errors.
Your company will be compliant, reduce tax bills, and avoid legal issues if you hire professional income tax filing services. You can enjoy customised strategies if you work with a tax specialist to meet certain business demands.
How Tax Advice Experts Can Save Your Business
An experienced tax expert will know about your business’ industry and your company’s unique internal structure. They can work with your company’s unique tax deductions and tax-saving tactics. They will also notify you of changes to the tax code and will ensure your company complies with it.
A tax expert also manages complex filings so that costly errors can be avoided. So, work with an audit and taxation professional to effectively optimise your liabilities and tax planning.
Final Thoughts
Lastly, if you want to avoid business and legal problems, remember that verifying your forms, company’s bank statements, dividend statements, and other essential papers when ITR filing is a must. If you want an effective tax filing process without mistakes, contact a reliable tax, auditing and law service provider.