Common Mistakes to Avoid While Filing Income Tax Returns
- Aditya Khandelwal
- Feb 26
- 3 min read
The due date for filing tax returns for individual taxpayers is 31st July of the assessment year. Delaying this process until the last minute often leads to errors that could result in penalties or an invalid return. With numerous provisions, deductions, sections, and rules, it is easy to make mistakes while filing an income tax return.
To ensure a smooth and accurate tax return filing process, taxpayers should be aware of the following common mistakes:
Selecting the Incorrect Form The ITR form should be chosen based on the nature of income and the taxpayer’s category. Filing the wrong form may result in a defect notice from the department, which must be rectified within a specified time.
Quoting the Wrong Assessment Year Entering an incorrect assessment year can lead to complications in tax calculations and refund processing.
Furnishing Incorrect Personal Information Ensure that personal details like name, address, email ID, phone number, PAN, and date of birth match the records in the PAN database. Bank details should be accurate to avoid refund delays.
Not Disclosing All Sources of Income Taxpayers must report income from all sources, including savings account interest, fixed deposit interest, rental income, short-term capital gains, and other earnings, even if some of these are tax-exempt.
Failure to Reconcile Income and TDS with Form 26AS Form 26AS contains details of TDS, TCS, high-value investments, advance tax, and self-assessment tax. Any mismatch between Form 26AS and Form 16 or TDS certificates can affect tax liability or refunds.
Failure to Reconcile Income and Investments with AIS and TIS The Annual Information Statement (AIS) includes additional details like GST turnover, securities transactions, and foreign remittances. The Taxpayer Information Summary (TIS) provides an aggregated summary of taxpayer transactions. Any mismatch must be addressed before filing.
House Rent Allowance (HRA) Not Considered If HRA is not considered by the employer, taxpayers can claim the exemption while filing their tax return.
Claiming Incorrect Deductions or Missing Available Deductions Taxpayers should carefully verify and claim eligible deductions related to income, expenditures, and donations to reduce their tax liability.
Non-Payment of Advance Tax Advance tax must be paid in installments (June 15th, September 15th, December 15th, and March 15th) to avoid interest and penalties.
Not Disclosing Schedule AL (Asset and Liability Statement) If net income exceeds Rs.50 lakh, individuals and HUFs must disclose their assets and liabilities in Schedule AL.
Non-Disclosure of Foreign Assets and Liabilities Residents and ordinarily resident Indians must report foreign income, assets, accounts, and shares in Schedule FA, even if the income is not taxable in India.
Not Reporting Interest on Income Tax Refunds Interest received on tax refunds is taxable and must be disclosed.
Forgetting to Verify or E-Verify ITR V Filing is incomplete unless the return is verified within 30 days, either electronically or by sending a signed physical copy to the IT department.
Not Clubbing Income When Required Income of a minor child or spouse may need to be clubbed with the taxpayer’s income. Exemptions of Rs.1,500 per child are available for minors.
Late Filing of Tax Returns Filing after the due date results in penalties, interest charges, loss of the ability to carry forward losses, and delayed refunds.
Filing a Tax Return Even if Income is Below the Taxable Limit Individuals owning assets abroad must file a tax return, even if their income is below the taxable threshold.
Incorrect Determination of Residential Status Residential status impacts taxability. Misclassifying it may lead to incorrect tax filings and liabilities.
Avoiding these common mistakes ensures compliance and minimizes tax-related issues. Seeking professional guidance or using reliable tax filing platforms can simplify the process and help taxpayers maximize their benefits while staying compliant.
Comments