ProductsPricingResearchSupportPartner

Common Mistakes Made When Filing Income Tax Returns

  •  4m
  • 0
  • 08 Feb 2023

The deadline for submitting income tax returns by individual taxpayers in India is 31 July. It is advisable that you submit your returns well in advance to avoid any mistakes that could happen in a hurry. The income tax department has adopted e-filing of returns in recent years. This has made the process of filing income tax returns more user-friendly. You may file physical returns if your income is below Rs 5 lakh p.a. and there are no refund claims.

When filing income tax returns there are some common mistakes that may occur. These errors may cause you trouble in the form of notices and penalties levied by the income tax department.

Here is a rundown of some of the most common mistakes:

  • Selecting An Incorrect Form:

Income tax forms are dependent on the type of taxpayer. For example, a businessman and a salaried individual will have to fill up different forms. The form can also differ based on the income slab that you fall into. For example, if your annual income is less than Rs. 5 lakhs, then you will have to file an ITR-I form. But if your income is more than Rs. 5 lakhs then you will have to file ITR-II form.

Thus, it is very important to fill up the right form and file your tax returns.

Related: Form 67 – Claim of Foreign Tax Credit

  • Quoting The Wrong Assessment Year:

Select the correct assessment year in the Income Tax returns (ITR) form to avoid double taxation. The assessment year is the year after the financial year in which a taxpayer files their ITR. So, for the financial year 2018–19, the assessment year will be 2019–20. This difference creates confusion in the minds of the taxpayers leading to mistakes.

  • Furnishing Incorrect Personal Information:

It is important to provide updated and correct personal information like phone numbers and email addresses. Also, ensure that bank details like account numbers and bank IFSC codes are all correctly entered in the ITR. If there are any errors in your personal details the income tax department may not be able to contact you. Your tax refund may also end up in someone else’s account.

The income tax department requires you to furnish details of all your bank accounts which are currently active.

  • Not Disclosing All The Sources Of Income:

Ensure that all your income sources are accounted for when filing your tax returns. Quoting the main income source is not enough. For example, you might be earning interest on fixed deposits or capital gains from a property on rent. All these types of earnings should be added under the ‘Income from other sources’ section in the ITR form. This is irrespective of the fact that some of these items might be exempted from tax. If you fail to mention all your income sources, you may face questions from the income tax department.

Related: Penalties Under the Income Tax Act

- Not Claiming Applicable Tax Deductions:

Sometimes, due to a lack of awareness people miss out on opportunities for claiming income tax deductions. For example, you can claim a deduction for investments made under Sukanya Samriddhi Yojana or for charity donations.

It is important to find out which of your investments are exempt from taxation so that you can save more and pay lesser tax.

Related: Tips for Start-up Taxation

  • Failure To Reconcile Tax Deducted At Source (TDS) With Form 16 & 26AS:

Document 26AS contains information of TDS and deposited with the government. It also contains details of any advance tax that you might have paid for that financial year. Before filing your tax returns, ensure that the details mentioned in 26AS, Form 16, and Form 16A are in sync. Any mismatch may result in double tax payment.

  • Not Paying Self-assessment Tax/ Advance Tax:

It is advisable that you pay all your tax dues by the financial year’s last day, 31 March. Failing to do so attracts a penalty of 1% of the tax payable for each month delayed.

Related: Tax Planning Under MAT

- Failure To Dispatch ITR V On Time:

Once you have successfully submitted your income tax returns you need to verify the return within the next 120 days. This verification can be done online via Aadhaar card, net banking, or electronic verification code (EVC) process. It can also be done offline by sending a hard copy of the ITR form to the CPC office in Bangalore.

Failing to verify your ITR will render it cancelled. It will be considered that you have not filed the ITR, which will attract a penalty from the income tax department. So, it is essential to verify your returns within 120 days of filing them.

You may notice a mistake in your filing while verifying it. The error could either be in claiming a deduction or reporting an income. Rest assured, there is no need to panic in such situations as there are provisions for a taxpayer to file a rectification request. This request can be made online from Income Tax India’s portal.

Conclusion

Filing of income tax returns has come a long way from years ago. The income tax department’s online portal for tax filing has made the process simpler. But first-time taxpayers might still be confused with so many forms and details to be filled in. There are online service providers who try to make the filing process even easier for new taxpayers. In the meanwhile, remember the points mentioned above while filling up your income tax return forms to avoid these common mistakes.

Also Read:

Get all your pre-market news updates here

Make the right decisions with dealer-assisted trading

Track live updates on the share market

Did you enjoy this article?

0 people liked this article.

What could we have done to make this article better?

Read Full Article >
Enjoy Zero brokerage on ALL Intraday Trades
+91 -

personImage
Enjoy Zero brokerage on ALL Intraday Trades
+91 -