Avoid These Common Mistakes While Filing Your ITR

As the deadline for filing Income Tax return approaches with the due date set for July 31, 2024, taxpayers should be wary of committing any last-minute missteps in their RTIs. Everyone should be careful when filing and try to enter the correct information. “Nowadays, many people, especially salaried people, file the ITR themselves, but there is a possibility of some errors,” says CA Ashish Niraj, Partner, ASN & Company, Chartered Accountants. Errors in submitting the ITR form can void your return, even subjecting the individual to penalties and legal action in some cases. Given the large number of allowances, deductions, clauses and regulations, he may feel overwhelmed by the complexities of IT laws. Below are some common mistakes that he should avoid while completing his ITR.

Also read: Change your tax regime even when you have business income

Selecting wrong ITR form: Taxpayers are required to provide all taxable and tax-exempt sources of income by filling the appropriate ITR form. Filing an incorrect ITR form can result in a return being labeled as ‘defective’.

“For example, someone who is a director of any company or startup needs to file ITR 2 but many times they file ITR 1, which is wrong. Additionally, those with income above 50 Lakhs are required to provide details of their assets and liabilities, which can only be declared in ITR 2 or ITR 3,” informs CA Niraj.

Non-declaration of FD (fixed deposit)/savings interest or dividend income: Some taxpayers may end up overlooking reporting interest income from savings accounts, FD accounts and other similar sources under the ‘Income from other sources’ option in their ITR. Income from savings accounts is taxable when it exceeds Rs. 10,000 a year. The interest received should be mentioned first under the head ‘Income from other sources’, and then savings account interest deduction can be claimed under section 80TTA if you are below 60 years of age.

“As AIS and 26AS have all such details and in case the assessee omits them in his returns department, he can send a notice which will not match with the department’s 26AS and AIS details,” says CA Niraj.

Non-declaration of capital gain: Taxpayers often fail to declare capital gains arising from exchanging mutual fund units as these transactions do not appear in bank statements and are not mentioned in the ITR.

“Any capital gain must be declared whether on stocks, mutual funds, land or buildings, or any other asset. Many people do not report them,” shares CA Niraj.

Income clubbing: The income of the minor child, with some exceptions, must be accumulated with the income of the parents. “Many people are not aware of this and file ITR only with their own income.”

Caution with personal data: Taxpayers should be vigilant while entering their details such as PAN, Aadhaar, Mail ID, Contact Number and Residential Address Details.

Many people enter wrong address or email/mobile number, Aadhar number etc. in error, which should be corrected by a revised statement.

Missing income from last employer: “Many people change jobs during the year. Many times they forget to ask their previous employer about their Form 16 and enter only the Form 16 details of their current employer in ITR. All employer details have to be entered in the ITR, any discrepancy will result in Taxpayer Notification,” informs CA Niraj.

Missing deductions and preservation of evidence: Some investment returns are tax-free, while others are taxable. Therefore, such deductions should be claimed cautiously to avoid scrutiny of your ITR by the IT department. While claiming the wrong deduction is one thing, some taxpayers may not even be able to claim the correct ones.

“Some people skip some deductions that can be claimed by filing revised returns,” says CA Niraj.

Apart from this, ensure that you provide correct evidence/proof of expenses/investments in your ITR as this could lead to deductions being disallowed without proper evidence and increases the chances of scrutiny of your ITR.

Incorrect income or expense details: “Business people sometimes file their ITR without properly reconciling all sales and expenses, which is discovered later. These must be reported and corrected by submitting revised returns. Also, while reporting income, your GST data also needs to be reconciled,” informs CA Niraj.

Not correctly incorporating all the income that appears in 26AS: Form 26AS provides information about the TDS deducted and deposited with the IT department in the name of the taxpayer. It provides information about the details about the TCS collected and taxes paid during the financial year in respect of the PAN number provided.

“Sometimes people report interests, etc. from the bank statements, but the figures in your 26AS are still different. Reconciliation with 26AS is necessary to avoid a mismatch,” highlights CA Niraj.

Exempt income that is not reported: All income, whether taxable or exempt, must be declared if a person is required to file an ITR. Many times taxpayers forget to include exempt income when filing their ITR.

Avoid these common mistakes when filing your tax returns to avoid unnecessary penalties or scrutiny from the income tax department. Sometimes even a small mistake while filing an ITR can land you in trouble with the IT Department.