The income tax filing deadline is now less than a month away. That is on 31st December 2020. Now, even though awareness about tax rules and regulations has risen a lot in recent years. Many people still have misconceptions and this leads to a lot of taxpayers making mistakes while filing their ITRs. Here are five mistakes you as the taxpayer should avoid while filing your ITR.

 
1. Who Has To File ITR?

One big fallacy is whether one has to file their income tax return at all or not? Under section 87A of the Income Tax Act, anybody with an annual income of up to Rs 5 lakh a year is eligible for a rebate that reduces the tax to zero. Many people wrongly assume that there is always a means that they don't have to file the tax returns. If you are below 60 years of age filing the tax returns is mandatory if the gross annual income exceeds Rs 2.5 Lakh. For senior citizens and very senior citizens, the threshold is higher. There are also circumstances under which you will have to file your return if your income is below the exempted threshold.

2. Not Disclosing Interest Income.

A lot of taxpayers don't report interest income in their tax returns. The interest income earned on bonds deposits and some small savings schemes is fully taxable and has to be reported as income from other sources in the income tax return. If the interest from an FD or RD exceeds Rs 10,000 in a financial year the bank deducts TDS. This then shows up in the taxpayers form in 26AS along with the interest income earned during the year. Many taxpayers are under the misconception that TDS takes care of the tax on the interest and no tax is payable as the bank has deducted tax. However, what you should know is that TDS is only 10% of your income. If the taxpayer is in a higher tax slab his liability would be higher because interest is fully taxable as income.

Calculating the capital gains made during the year is a complicated exercise. Besides, the gains from different instruments are taxed differently. Taxpayers who have invested in mutual funds can get help from the fund houses. Fund houses provide investors with a capital gain statement that mentions all the transactions and gains made during the year. They not only segregate the long term and short term gains and mention the tax payable, but they also give the post indexation tax. To calculate gains from stocks you need a statement from your broker. There is no need to mention the script-wise details of transactions while reporting them or by reporting short term gains but if you have also earned long term gains from stocks then you have to include all the details. Details of the script, buying price, selling price, dates of the transaction have to be mentioned.

 
4. Not Clubbing Of Income

 For instance tax rules that if money gifted by a spouse is invested further, the income from that investment will be clubbed further that of the giver and taxed accordingly. Likewise, also income from investments made in the name of spouse and minor children will have to be added to the income of the giver.

 
5. Late Tax Savings

The last date for tax saving investments this year was extended till 31st July due to the Coronavirus pandemic. Many would have made tax savings investments during this extended period. If you have belated tax saving then it has to be duly mentioned in the returns in a new scheduled DI. When you fill-up this new scheduled DI in the tax form mention only the tax-saving investments that you want should be considered for the previous financial year. Don't include investments that are meant to be considered for the current financial year that is 2021. Another change to notice is the separate section for reporting the reductions to claim under section 80D. From this year on you have to give the break of the expenditure incurred on family members, details of the amount paid for health insurance, preventive health check-ups and expenditure of medical treatment has to be mentioned as well.

To avoid these and any other errors make sure you file your income tax return before the deadline which is 31st December 2020.