10 Common ITR Filing Mistakes That Could Cost You Dearly
Filing Income Tax Returns (ITRs) can be a daunting task for many taxpayers, especially those lacking a solid understanding of tax laws or those opting to file without professional assistance. While individuals often exercise caution and diligence, the rush to meet deadlines can lead to serious errors with potentially costly consequences.
Rectifying mistakes in ITR filing is possible, typically through filing a revised return or submitting a rectification request. However, this demands additional time and effort, which most taxpayers prefer to avoid. Therefore, preventing errors in the first place is paramount.
Here are 10 common mistakes taxpayers often make while filing ITRs:
- Not Filing ITR: Some individuals erroneously believe they are exempt from filing if their income falls below taxable thresholds or if tax has already been deducted. However, the obligation to file arises if the gross taxable income surpasses specified limits.
- Using Wrong ITR Form: The Central Board of Direct Taxes (CBDT) provides distinct ITR forms for various taxpayer categories. Selecting the incorrect form renders the return invalid, emphasizing the importance of choosing the appropriate form.
- Not Validating Bank Account: Pre-validating bank accounts on the e-filing portal is mandatory to facilitate direct crediting of tax refunds. This step minimizes errors and fraud by confirming the account’s validity and ownership.
- Failure to E-Verify ITR: Verification of filed returns within 30 days is compulsory to complete the filing process. Unverified returns are considered invalid, and the Income Tax Department does not process them.
- Not Claiming Eligible Deductions: Taxpayers often overlook deductions they are entitled to, such as those under Section 80TTA for savings account interest or Section 80GG for rent payments.
- Not Showing Miscellaneous Income: Neglecting to report miscellaneous income, like interest or commission earnings, can lead to trouble with tax authorities. All sources of income must be disclosed in the ITR, regardless of taxability.
- Delay in Filing ITR: Late filing attracts penalties under Section 234F, ranging from Rs. 1,000 to Rs. 5,000, depending on the delay duration. Filing within the stipulated timeframe is crucial to avoid these fees.
- Reconcile Income with AIS: Checking the Annual Information Statement (AIS) ensures income accuracy by verifying various financial transactions. Any discrepancies should be rectified promptly.
- Check TDS Amount with Form 26AS: Form 26AS provides details of taxes deducted at source against the PAN. Discrepancies must be addressed to avoid denial of TDS credit in the ITR.
- Club Income from Previous Employer: Reporting income from all employers within the financial year is essential to avoid tax liability discrepancies. Careful scrutiny ensures accurate tax payments.
By being vigilant and attentive during the ITR filing process, taxpayers can mitigate the risk of costly errors. Seeking professional guidance or utilizing online resources can also aid in accurate and timely filing, ensuring compliance with tax regulations.
