Filing your Income Tax Return (ITR) is a crucial financial responsibility for every taxpayer. However, even a minor mistake can lead to penalties, delayed refunds, or unnecessary scrutiny from the Income Tax Department. Here are some common mistakes to avoid while filing your ITR:
1. Choosing the Wrong ITR Form
Selecting the correct ITR form based on your income source is essential. Filing with the wrong form may result in the rejection of your return and possible notices from the tax department.
2. Failure to Report All Income Sources
Many taxpayers only declare their salary income and forget to mention other sources such as:
- Interest from savings accounts, fixed deposits, or recurring deposits
- Capital gains from stocks or property sales
- Freelancing or part-time income Not reporting all sources can lead to penalties and reassessment of your return.
3. Mismatch in TDS Details
Your employer or bank deducts TDS (Tax Deducted at Source), which gets reported in Form 26AS and the Annual Information Statement (AIS). Ensure that the income details you enter in your ITR match the TDS records to avoid discrepancies.
4. Not Verifying the ITR After Submission
Filing your ITR is only half the job; you must also verify it within 30 days of filing, either electronically via Aadhaar OTP, net banking, or by sending a signed ITR-V to CPC, Bengaluru. An unverified return is treated as invalid.
5. Incorrect Bank Account Details
Providing incorrect or non-updated bank account details can delay your tax refund. Always double-check your account number and IFSC code to ensure a smooth refund process.
6. Claiming Incorrect Deductions and Exemptions
Taxpayers often make mistakes in claiming deductions under Section 80C, 80D, 10(14), and HRA (House Rent Allowance). Ensure you have valid proof and eligibility for deductions claimed to avoid issues during scrutiny.
7. Filing ITR After the Due Date
Missing the ITR filing deadline (usually July 31st for individuals) results in penalties, interest on tax dues, and the loss of certain exemptions. Always file your return on time to avoid unnecessary hassles.
8. Not Paying Self-Assessment Tax Before Filing
If there’s any additional tax liability beyond TDS, ensure that you pay the self-assessment tax before filing. Failure to do so can lead to notices and interest penalties.
9. Ignoring High-Value Transactions
The Income Tax Department monitors high-value transactions such as:
- Credit card bills exceeding Rs. 10 lakh per year
- Large investments in mutual funds, stocks, or real estate
- Cash deposits over Rs. 10 lakh in savings accounts Failing to report such transactions correctly can invite scrutiny.
10. Not Keeping Proper Records of Income and Investments
Maintaining records of income sources, investment proofs, and tax-saving documents is crucial. In case of an audit or tax scrutiny, missing records can lead to penalties and disallowance of deductions.
Conclusion
Filing your ITR accurately ensures compliance and avoids unnecessary hassles with the tax authorities. By being mindful of these common mistakes, you can prevent errors, ensure faster processing of refunds, and stay stress-free during tax season. If you need professional assistance with your ITR filing, consult a chartered accountant or tax expert.
For tax consultation, reach out to Ankush Aggarwal and Associates your trusted partner in financial compliance and tax planning.
