1. Incorrect personal information:
Taxpayers should be vigilant in providing their permanent account number (PAN), Aadhaar and address details. Special attention should also be paid to the email ID and contact number provided, ensuring that they match the official documents. Keeping all personal information up to date and accurate is essential to avoid discrepancies.
2. Choosing the wrong ITR form:
Taxpayers must declare all their taxable and tax-exempt sources of income using the correct ITR form applicable to their situation. The Income Tax Department provides different ITR forms for various types of taxpayers and sources of income. Filing the wrong ITR form may result in rejection of the return, which may be termed as ‘defective’. Therefore, taxpayers must determine the appropriate form based on their sources of income.
3. Not reporting all sources of income:
Under income tax laws, taxpayers must report all sources of income, whether tax-exempt or not. Due to lack of awareness, many taxpayers do not mention or report them under the heading “Income from other sources” in their tax returns. This may include sources such as interests, rental properties, or self-employment. Failure to report all income may result in penalties for failure to report all income.
4. Failure to submit required forms:
To claim certain exemptions, taxpayers must file specific forms before filing their returns. Errors often occur while claiming deductions under sections like 80C, 80D and 80G. It is essential to ensure the availability of valid documentation to support all claimed deductions and exemptions.
5. Failure to reconcile Form 26AS:
Form 26AS is a consolidated tax return that provides details of tax deducted at source (TDS) and tax collected at source (TCS) to the Income Tax Department on behalf of the taxpayer. All income included in Form 26AS must be declared as these details are already available to the tax authorities. Failure to reconcile Form 26AS information with personal records may lead to discrepancies and result in the taxpayer receiving a notice.
6. Not declaring income from your last job:
If a person has changed jobs during the financial year, the income from the previous employer must be declared while filing the ITR, along with the income from the current job. Failure to declare this income may create a discrepancy between the TDS certificate and Form 26AS.
7. Late submission of returns:
Delaying or missing the deadline for filing the ITR can deprive taxpayers of certain rights, generate penalties and generate interest on unpaid taxes. Losses cannot be carried forward to the following year and late filing fees will apply. Taxpayers should be aware of due dates and ensure timely filing of their returns. The final date for filing ITR for the financial year 2023-24 is Wednesday, July 31, 2024.
8. Not disclosing foreign assets and income
The government has taken steps to combat black money and limit money outflows from India. Taxpayers must disclose any foreign assets or income, such as foreign bank accounts or property, on their annual income tax returns. Failure to do so may result in heavy penalties and legal consequences.
9. Lack of proof of claimed deductions:
For all expenses or investments claimed as deductions under Chapter VIA (e.g. child tuition fees, LIC, PPF, health insurance policy), taxpayers are required to maintain records, evidence and vouchers. Claiming a deduction without adequate evidence may result in disallowance of those deductions and increased tax liability during a scrutiny assessment. Records must be kept for at least 7 years, as the case may come under income tax scrutiny up to 6 years after the end of the year in which the return is filed.
10. Neglecting verification before presentation:
The responsibility of filing the return does not end with the filing of the ITR. Verification of the return within 30 days of its submission is mandatory as without it the Income Tax Department will not process the return. If the ITR V is not verified within the allowed time frame, the return will be considered ‘invalid’ and the department will send a notice.
By being aware of these common mistakes and taking proactive steps to avoid them, taxpayers can ensure a compliant and hassle-free income tax filing process. Listed below are the common mistakes to avoid while filing your ITR.
