Income Tax News: Filing income tax returns can be a daunting task, fraught with potential pitfalls. Errors in filing can render your return invalid and even subject you to penalties and prosecution. Whether you find the process tedious or straightforward depends largely on the guidance you receive. With numerous provisions, deductions, and sections to navigate, it’s easy to feel overwhelmed by the complexities of the Income Tax landscape.
To help you steer clear of common pitfalls, we’ve compiled a list of the most prevalent mistakes taxpayers make while filing their income tax returns. Our comprehensive guide aims to equip you with the knowledge to avoid these missteps and ensure a smooth filing process.
Here are 20 common ITR filing mistakes to watch out for:
1. Filing ITR using Incorrect Tax Form: Choosing the wrong ITR form can result in your return being labeled as ‘defective.’ It’s crucial to select the appropriate form based on your sources of income to avoid complications.
2. Mentioning incorrect personal or correspondence details: Ensure accuracy when providing personal information such as PAN, Aadhaar, and contact details. Mistakes here can lead to communication issues with the Income Tax Department.
3. Filing incorrect and incomplete bank details: Incorrect bank details can delay your tax refund. Provide accurate and validated bank account information to expedite the refund process.
4. Not reporting interest income from savings bank accounts, Fixed deposits, etc.: Failure to report interest income can result in compliance issues. Be diligent in disclosing all sources of income to avoid penalties.
5. Not reporting income of the last job: If you’ve changed jobs during the financial year, ensure you report income from all sources to avoid discrepancies.
6. Not reconciling Form 26AS statement: Review your Form 26AS to verify TDS details and ensure accurate reporting in your return.
7. Not checking the bank statements: Thoroughly review bank statements to account for all sources of income and ensure accurate reporting.
8. Not mentioning exempted income: Report all income, whether taxable or exempt, to comply with Income Tax laws and avoid penalties.
9. Not reporting interest received on income tax refunds: Interest earned on tax refunds must be reported as income from other sources in your return.
10. Failure to E-Verify ITR: Verify your return within 30 days of filing to avoid penalties and ensure timely processing.
11. Not clubbing incomes: Certain instances require you to combine income from multiple sources for tax purposes. Failure to do so can lead to non-compliance.
12. Late Filing of income tax return: File your return before the due date to avoid penalties and ensure uninterrupted compliance.
13. Not keeping evidence of deductions claimed in income tax return: Maintain records of deductions claimed to substantiate your claims and avoid scrutiny.
14. Failure to account for more than two property: Report income from all property holdings to comply with tax laws and avoid penalties.
15. Non-filing of income tax returns: Even if your income is below the taxable limit, filing returns is mandatory in certain cases, such as owning assets abroad.
16. Not Paying Advance Tax/ Self-Assessment Tax: Calculate and pay advance tax to avoid penalties and ensure timely compliance with tax obligations.
17. Not reporting capital gains on switching units of mutual funds: Report all capital gains from mutual fund transactions to comply with tax laws and avoid penalties.
18. Submitting Fake Invoices/ giving the wrong disclosure: Avoid submitting false documents or misleading information to prevent legal consequences.
19. Not linking PAN with Bank Accounts: Link your PAN with your bank account to facilitate tax refunds and ensure seamless transactions.
20. Not submitting Requisite Forms: File necessary forms before filing returns to claim exemptions and benefits accurately.
By steering clear of these common mistakes, you can streamline the tax filing process and ensure compliance with Income Tax regulations.