Tax Talk: Pre-filled data in ITR not enough, do due diligence

financialexpress.com:

The introduction of pre-filled income tax forms by the Income Tax Department aims to simplify the process of filing tax returns. By auto-populating information obtained from the returns filed by others like employers, banks, mutual funds, and other deductors, the department intends to ensure that taxpayers report their income accurately. While this innovation has been well-received by many, caution and thoughtful consideration are required when relying solely on pre-filled ITRs.

Taxpayers must understand that the ultimate responsibility for the accuracy of the income tax return lies with them, not the income tax department. Even though the information may be pre-filled, taxpayers are still obligated to verify and confirm the correctness of the details provided. Any errors in the ITR will be the taxpayer’s sole responsibility and could lead to potential penalties or legal issues.

Reporting income

One of the potential pitfalls of relying solely on pre-filled data is the possibility of reporting a higher income than what is accurate. For instance, if a taxpayer wants to claim an exemption for house rent allowance, the detail of this exemption is not pre-filled in the income tax return, and if the taxpayer relies solely on the pre-filled data, she may end up paying more taxes than necessary. Moreover, there is a limited timeframe within which taxpayers can file a revised return, typically three months before the end of the assessment year or completion of the assessment, whichever is earlier. Beyond this period, taxpayers lose the option to correct any errors or omissions in their returns, resulting in the loss of excess taxes paid.

Conversely, if the taxpayer’s actual income is higher than what is pre-filled, the onus then