Wednesday, 12 August 2020

The most common mistakes people make while filing Income Tax Return (ITR)

The most common mistakes people make while filing Income Tax Return (ITR)

It is the time of the year when you need to file your income tax return. The due date for filing income tax return is 31st July. It is mandatory to file tax return if your income exceeds the basic exemption limit allowed by the government. The government of India has made the process of tax filing very easy and hassle-free by introducing e-filing. In this post, I will discuss some common mistakes that people make while filing their ITR.



Filing income tax return is once a year activity if you don't commit any mistake while filing your ITR. Individuals often make mistakes in the process of tax filing that can complicate the tax filing process further. I have listed below some common mistakes that you should avoid at the time of tax filing.



Common Mistakes People make while filing Income Tax Return

Following are some common mistakes taxpayers make at the time of tax filing:

1. Not filing income tax return

It is the most common mistake that people forget to file tax return. You need to file your ITR if your income exceeds the basic exemption limit allowed by the government. To avoid this mistake always file your ITR and that also before the last date.



2. Using wrong ITR form

Selecting a wrong ITR form is also a common mistake committed by people at the time of tax filing. Please note that use of an incorrect form is considered defective even if you file your income tax return correctly. The IT Department has prescribed various forms such as ITR 1 SAHAJ - for individuals having income from salaries, one house property, other sources (interest, etc), and having total income up to 50 lakh. The other forms are ITR 2, ITR 3, ITR 4 SUGAM, ITR 5, ITR 6 and ITR 7. You have to select the correct form for your tax filing otherwise your ITR will be rejected by the Income Tax Department.
The most common mistakes people make while filing Income Tax Return (ITR)


3. Incorrect personal details

You are required to mention correct personal details like name, PAN, address, email ID, contact number, Aadhaar number, and bank account number with IFSC code to avoid rejection of your ITR. For example, if you fill wrong bank account number then your tax refund (if any) will be transferred to that account. Therefore, you should file your taxes carefully to avoid such mistakes. Also, note that most of the communication with the IT department happens through email so it is important to provide your correct email ID.

4. Not checking Form 26AS

It is important to check your Form 26AS before filing your ITR. Form 26AS is the annual consolidated tax credit statement issued to PAN holders. This statement shows all the taxes received by the Income Tax Department against the PAN of the taxpayer during the financial year. Therefore, always verify your Form 26AS for any discrepancies before tax filing for the year.

5. Not filing income tax return electronically

If your assessable income exceeds Rs 5 lakh then you have to compulsorily e-file your taxes. Senior citizens who are 80 years old or older can choose to file a physical ITR. Click here to read: How to file your ITR online? 

6. Not claiming deductions

You should claim your deductions under various sections of the Income Tax Act to reduce your tax liability. The government has given various deductions under Section 80. If you forget to claim deduction while tax filing, you may lose the money by paying more taxes. Therefore, always mention your deduction under appropriate sections to reduce tax liability.

7. Not disclosing exempt income

There are several types of incomes which are exempt from tax, but notifying about the same to the IT department is necessary. Exempted incomes such as interest on savings account up to Rs 10,000 and dividends from stocks should be mentioned while filing you tax return to avoid unnecessary queries from the Income Tax Department.

8. Not disclosing interest on fixed deposits

Most of the people often avoid adding interest earned from their fixed deposits to their total income while filing ITR. Interest earned on various fixed deposits should be added to the total income for the year and pay tax and pay tax accordingly to avoid unnecessary queries from the IT department.

9. Investment in the name of spouse and children

If you are investing your income in the name of your spouse and children then you have to add the income earned by your spouse/children out of that investment in your total income while tax filing.



10. Not verifying ITR

You need to either e-verify your income tax return, using the e-verify return option on the website, Net banking, Aadhaar OTP, pre-validated bank account, bank ATM and pre-validated Demat account to e-verify your return. You can also send a printed and signed copy of ITR-V to the Bangalore CPC within 120 days from the date of e-filing. If you forget to verify your ITR then it will be considered as incomplete.



Hope now you will keep these points in mind while filing income tax return to avoid penalties and any unnecessary trouble. The last date for filing tax return for individuals is 31st July.





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1 comment:

  1. I have been your silent reader for a while, and now I think you should know how valuable and helpful the information and tips you have shared with us. Thank you for sharing. Would love to see your updates again and maybe we can share ideas and collaborate with each other in the future.

    Tax Professional

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