Common Tax Mistakes Across Different Income Sources

The preceding articles have described the five heads and the two regimes. The errors that undo that work are few, and they repeat. This article records them so that a household preparing a return, or preparing a sale, can test its file against a short list. It also records two matters of calendar: tax deducted at source and advance tax, and the cost of leaving the return until after the due date.

Mistakes That Recur

1. Selecting a tax regime because a colleague selected it, without running the year’s own house-rent allowance, housing-loan interest and chapter VI-A deductions.
2. Comparing two employment offers on cost-to-company alone.
3. Claiming interest on a self-occupied house while remaining on the new regime.
4. Omitting rent, or omitting a deemed-let-out computation on a vacant second property.
5. Treating every credit as salary, including professional receipts and deposit interest.
6. Redeeming mutual-fund units or switching schemes without reading the holding period of each instalment.
7. Completing a property sale before a plan exists for section 54, section 54F or section 54EC, where an exemption is intended.
8. Investing only the gain under section 54F when the section requires the net consideration.
9. Omitting deposit interest and dividends that already appear in the annual information statement.
10. Treating tax deducted at source as the end of the matter, and ignoring advance tax where the residual liability will exceed the threshold.

TDS, Advance Tax and the Due Date

Tax deducted at source is a collection mechanism. It is not an assessment. Where income under other sources or under business is substantial, and the tax remaining after TDS will exceed the statutory threshold, advance tax is payable in the instalments prescribed for the year. Interest follows default. Filing after the due date restricts the carry-forward of certain losses and exposes the taxpayer to late fees. The planning described in this series is incomplete if it is attempted only in July.

Business and professional taxpayers should reconcile Form 26AS and the annual information statement with their own invoice register before they compute profit. Salaried taxpayers should do the same with Form 16. Discrepancies are cheaper to resolve before the return is uploaded than after an intimation arrives.

A Practical Order of Work

Download the annual information statement. Place each item under a head. Compute each head. Apply the regime comparison last, not first. If a transfer is contemplated, complete the capital-gains plan before the transfer. If the facts are not ordinary — multiple properties, a presumptive scheme near its threshold, a gain that may use section 54F — consult a qualified professional. The academy’s purpose is literacy. It is not a substitute for an engagement on a complex file.