ITR Filing - Common Mistakes to Avoid while Filing Your Income Tax Return

The deadline for filing Income Tax Returns (ITR) for FY 2023-24 (AY 2024-25) is July 31st, 2024. And if you don't file your returns till the deadline, than you have to the penalty for late filling of the returns.

Under section 234F of Income Tax Act 1961, The amount of late fees penalty can be ?1000 or ?5000 (depends on your income!) If your income is/above ?5 Lakhs, then you are required to pay ?5000 as a late fees penalty(along with interest on tax liabilities!). And If your income is below ?5 Lakhs, in that case you are require to pay ?1000 as a late fees penalty (along with interest on tax liabilities!)

So, if you don't want to pay that much of amount as a late fees penalty, then you should file your income tax returns on time! (i. e. on/before July 31st, 2024) {Don't forget this date!}

But, if you file your income tax returns on time and make few common mistakes. This too can make you to pay high charges and might receive notice from the Income Tax Department regarding making mistakes in ITR filings!

Don't worry about filing Income Tax Returns! It's not a tough job! I will tell you how to avoid such common mistakes! Will help you out in understanding the complete matter!

You can consult with professional for filing Income Tax Returns. But I think even if you're planning to do this with the professionals, you should read this post. The reason being everyone should have a basic idea about common mistakes to avoid while filing ITR.

This guide will highlight some common mistakes taxpayers make while filing ITRs. By understanding these pitfalls, you can ensure a smooth and accurate filing process. So, Lets keep it to the point.

COMMON MISTAKES TO AVOID

• Choosing the Wrong ITR Form:

There are different 7 ITR forms for various income profiles. Selecting the incorrect form can delay processing or render your return invalid. Check this table for the eligibility criteria.

• Inaccurate Personal Details:

Double-check your PAN, Aadhaar number, address, email ID, and phone number. Mismatches can lead to communication issues and delays. This is the major common mistake which people make while filing ITR. Don't make such mistakes, it will lead you to problems like verification issues, information mismatch and major TDS refund issues.

• Incorrect Bank Details:

Ensure you provide the correct bank account number and IFSC code for speedy refunds. Inaccurate details can delay or prevent your refund.

• Missing Interest Income:

Report interest earned from savings accounts, fixed deposits, etc., even if it's below the taxable limit. Income Tax Department already knows about your earnings and your income sources. So, don't try to fool them. This might cost you!

• Unreported Job Income:

If you switched jobs during the year, report income from both employers. Discrepancies can arise from missing Form 16 details. Check all such specific factors before filing ITR.

• Not Reconciling Form 26AS:

This form shows income details and tax deducted at source (TDS) reported by the government. Ensure all income mentioned in Form 26AS is included in your ITR.

• Overlooking Bank Statements:

Review your bank statements to ensure all income received (gifts, interest, etc.) is reported in your ITR.

• Forgetting Exempt Income:

While exempt income isn't taxable, it still needs to be reported in your ITR. Don't claim or add false exemptions while filing ITR. This costs very bad. To know more about this watch this video on YouTube!

• Missing Interest on Tax Refunds:

Interest received on income tax refunds should be reported as "income from other sources."

• Skipping E-Verification:

Verifying your ITR within 30 days of filing is mandatory. Non-verification can lead to your return being considered invalid.

ADDITIONAL TIPS

• Maintain Records: Keep proof of deductions claimed (investments, medical bills, etc.) for potential scrutiny.
• Multiple Properties: If you own multiple properties, understand how "deemed to be let out" applies for tax purposes.
• Foreign Assets: Individuals with foreign assets may need to file specific ITR forms.
• Advance Tax/Self-Assessment Tax: Ensure you pay any required advance tax or self-assessment tax.
• Mutual Fund Capital Gains: Report profits earned on switching mutual fund units.
• Fake Invoices/Disclosures: Avoid submitting fabricated bills to claim deductions. The Income Tax Department has verification measures.
• Link PAN with Bank Account: Ensure your PAN is linked to your bank account for smooth refunds.
• Requisite Forms: File additional forms if needed for claiming specific exemptions (e.g., salary arrears form).
• Residential Status: Determine your residential status correctly to avoid errors in taxable income calculations.
• Deduction Accuracy: Claim deductions correctly to avoid scrutiny.

CONCLUSION

Filing your ITR accurately can save you time, money, and stress. By following these tips and avoiding common mistakes, you can ensure a smooth and hassle-free ITR filing experience.