Service Tax
People who fall in the list of tax-payers, have to pay a certain amount from their income to the government. A service tax is a form of tax that is issued by a country’s government. The government imposes a service tax on service providers who are in the business to consumer (B2C) market.
As you know that there are two classifications of tax systems in our country. These are direct and indirect taxes. Thus, a service tax is an indirect tax under this classification of the taxation system. The service tax was issued under the Finance Act of 1994.
Individuals, small-size, mid-size and large businesses who run their business, trading goods and services, all come under the service tax system. Here, these businesses, including groups of organizations in the marketing industry, are required to pay service tax to the government.
Since the government takes authority in the taxation system, therefore, some individuals or businesses fail to file their tax timely, or there might be others who unintentionally miss the filing date.
In this blog, you will read about 10 common mistakes that everyone makes in services tax rules.
Know these 10 mistakes that people make in service tax rules
Service Tax
Given below are the 10 common mistakes that people usually make when filing their tax returns and how to avoid such mistakes in the future.
1. Making miscalculations on paper
One of quite a lot of mistakes that few individuals make is the human error. By this, it is meant making calculation errors. This is a very common mistake that is often made by individuals when he or she has to file their tax returns. Mistakes tend to arise when you are not careful with a specific task, which is also your priority.
Performing mathematical calculations by hand and on a paper can be very hectic. This often leads to making human errors, especially when you, as a tax-payer, are calculating larger digits.
Making calculation mistakes could also land you in trouble. Therefore, avoiding careless errors when calculating your digits before proceeding with the submission, can save you unwanted compliance penalties.
2. Making mistakes electronically
This signifies indirect human errors when using an electronic device, such as a desktop computer, laptop, smartphone, tablet, etc. Life is full of priorities which make people like you and me busy.
In contrast to making mistakes on paper, people who rely on their computers and devices for submitting their tax returns, often make errors as well when typing. There may be chances that sometimes, someone mistypes details and figures on his or her tax return application form when submitting online.
3. Failing to report tax-free income
A person who pays tax, when fails to mention tax-free income on his or her tax application form, this slows down the processing of the person’s returns. A tax-free income is used in provident fund claims, tax-free bonds, life insurance policies, capital gains from stocks, etc.
If you fail to report or under-report your income details to the tax department, you could end up in serious consequences. When a person switches his or her job several times, he or she must provide details, like the employers, income received, etc.
4. Failing to file your income tax returns
Most people fail to file their income tax returns at the given time. When you are employed in a company and your annual income is above Rs. 2.5 lakhs slot, you become liable to pay a certain amount of your earnings to the government in the form of tax.
You must know that it is important that you file your annual tax returns responsibly. If you responsibly file your tax returns, your returns processing would complete successfully. Also, you could be saved from penalties and other legal disciplinary actions, including legal prosecution.
5. Ignoring Form 26AS
Many people often ignore paying attention to and reading Form 26AS, which is the Tax Credit Statement. This statement contains details of your past tax payments.
You must remember that just as you are paying your tax on a timely basis, you must also keep yourself updated with the details about your tax payments on Form 26AS. Referring to the Tax Credit Statement can prevent you from making calculation mistakes when you pay your tax.
6. Filing your Income Tax Returns (ITR) Form incorrectly
Sometimes, certain individuals file their income tax returns Form with incorrect details. The mistakes when entering information on the form could also be due to misinformation.
A person who is running a business and is under the tax payable scheme, must fill the correct details carefully on the income tax returns form and avoid landing yourself into legal disciplinary actions that are taken by the government and the department of tax.
7. Using wrong methods for filing your income tax returns
There are two methods for filing your income tax returns. You can choose between filing your tax returns physically on paper, or through filing online.
However, if you are regularly filing your tax returns electronically, do not use the physical method. Similarly, a senior citizen who prefers filing his or her income tax returns physically will always have to stick with it.
8. Failing to verify your tax returns
Another common mistake which few people make is failing to verify your income tax returns, after completing the filing procedure. One must understand that only filing one’s tax returns is not enough. One has to also verify their tax returns either electronically or physically.
For online verification, you would be required to validate your identity proof or an identity card. Whereas, for other people who file their tax physically, they must submit additional documents that are attested by you to the office of the income tax department.
9. Failing to provide your fixed deposit income
If you have a fixed deposit account apart from your savings bank account, you are not exempt from the income tax return. The interest income from your fixed deposit (FD) account is payable as tax and you cannot exclude this from your taxable income.
10. Failing to revise your tax return
Sometimes, people tend to forget revising their income tax return. Revising your income tax return is important, as it can also give you another chance of rectifying any miscalculations or information entered by you.
This is useful, otherwise, your income tax return filing may get rejected by the department of income tax.
Avoid mistakes and avoid trouble
Having understood the picture and the importance of filing your income tax return honestly, can save you from getting into legal trouble.As long as you are paying tax on time and without any errors, you will have no problems in the future.
Thus, when you file your income tax return this year, remember not to make these mistakes and protect yourself from being penalized or a legal prosecution by the authorities.