Precautions in income tax return preparation

While working in the Income Tax department, I have noticed various mistakes in the income tax returns of many taxpayers while determining income tax, settling or approving income tax cases.

Many a time I have had disputes with authorized representatives or tax consultants regarding these errors of taxpayers. I could not understand all the reasons then.

Now running my own office as a tax consultant after retirement from income tax department, I understand why taxpayers or their nominated representatives make so many mistakes while filling income tax returns.

Recently, while giving legal advice to several individual taxpayers and company taxpayers in income tax cases, I realized that many people in this country are aware of their income, but they are not at all aware of the proper management of their earned money.

An example will make it clear to everyone. For example, if you are suffering from heart block and a nurse you know meets you and tells you that she has worked in operation theater for 15 years with an expert heart surgeon. She saw many patients being operated on. She wants to perform your heart surgery in the light of that experience at a low cost. There will be no problem.

Would you agree to that? Definitely say you don't agree. The same is the case with income tax return preparation. But many people do not want to accept or understand it. They prepare and submit income tax returns at very low cost to someone who is actually like a nurse. A nurse is very experienced but she can't perform heart surgery.

What are the consequences? At one point the return came under audit due to various errors and the taxpayer faced great mental pain as well as financial penalties. By the time he realizes this, it is too late.

It is not possible for all citizens to prepare Income Expenditure Account as per rules and Income Tax Act. It happens all over the world. It is wise to have this done by someone who well knows these laws.

In this case, it is foolish to take help from someone who does not know the law. For this, huge fines have to be paid later. I left out the mental pain.

People who prepare income tax returns correctly or accurately are working safely in business or profession 360 days a year. And those who don't, suffer mental pain throughout the year.

Writer: Bazlul Kabir Bhuiyan, Former Commissioner of Taxes, National Board of Revenue and Executive Director, Center for Tax Education and Research