Common Mistakes to Avoid
Filing income tax returns (ITR) can be a dificult task for many taxpayers, especially if they lack a good understanding of the process or choose to file without professional assistance. Rushing to meet the submission deadline can lead to serious mistakes that could cost taxpayers heavily. While these errors are correctable, rectifying them demands additional time and effort, making it essential to avoid them in the first place.
1. Not Filing ITR
Failing to file an ITR is a common mistake, often due to misconceptions about income tax liability. It’s crucial to remember that individual taxpayers must file an ITR if their gross taxable income exceeds the basic exemption limit.
2. Choosing the Wrong ITR Form
Selecting the incorrect ITR form can render the return invalid. Understanding the different ITR forms and selecting the appropriate one based on the nature of income is crucial. https://www.incometax.gov.in/iec/foportal/help/identification-and-generation-of-applicable-itr-individual-faq
How to Choose the Correct ITR Form:
- ITR-1: For individuals with total income up to Rs. 50 lakh from salaries, one house property, other sources, and agricultural income up to Rs. 5 thousand.
- ITR-2: For individuals and HUFs without income from business or profession.
- ITR-3: For individuals and HUFs with income from business or profession.
- ITR-4: For individuals, HUFs, and firms with total income up to Rs. 50 lakh from business and profession under specified sections and agricultural income up to Rs. 5 thousand.
- ITR-5: For entities other than individuals, HUFs, companies, or those filing Form ITR-7.
- ITR-6: For companies other than those claiming exemption under section 11.
- ITR-7: For entities required to furnish return under specific sections.
3. Failure to Validate Bank Account
Pre-validating bank accounts on the e-filing portal is necessary for direct credit of tax refunds, reducing errors and fraud.
4. Not E-Verifying ITR
Verifying the ITR within 30 days of filing is crucial to complete the process and avoid invalidation of the return.
5. Omitting Miscellaneous Income
All sources of income, regardless of taxability, must be disclosed in the ITR. Failure to report miscellaneous income can lead to issues with the Income Tax Department.
6. Neglecting Eligible Deductions
Taxpayers often forget to claim deductions for which they are eligible, potentially causing them to miss out on tax benefits.
7. Delay in Filing ITR
Failing to file within the specified time limit attracts mandatory late filing fees under Section 234F, ranging from Rs. 1,000 to Rs. 5,000.
8. AIS Reconciliation
Cross-checking the Annual Information Statement (AIS) while filing the ITR is essential to ensure accuracy and avoid discrepancies in income.
9. Verifying TDS Amount with Form 26AS
Form 26AS contains crucial information about taxes deducted or collected at the source against the taxpayer’s PAN. Discrepancies in this data can affect the TDS claim in the ITR.
10. Clubbing Income from Previous Employer
Incorporating income from previous employment is vital, as it impacts tax liability and ensures accurate filing.
Averting these common mistakes can help taxpayers navigate the ITR filing process smoothly, ensuring compliance with tax regulations and maximizing eligible deductions. It’s imperative to exercise due diligence and seek professional guidance when in doubt to avoid the repercussions of filing errors.
