Mistakes to Avoid while Filing Income Tax Return

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During July and August each year, taxpayers in India are required to file Income Tax Returns (ITR). ITR is a form used to determine and declare an individual’s gross taxable income and tax liability.

While many individuals prefer to file their ITR themselves, not all thoroughly understand the complex Income Tax Law, which may lead to mistakes. There may be mistakes in ITR for even taxpayers who consult advisors. 

It is advisable to file returns compulsorily or voluntarily for several reasons. 

  • Crucial to obtaining income proof for loan applications, visa applications, and credit card issuance
  • Losses cannot be shown for exemption in subsequent years if not recorded in tax returns.
  • Non-filing of returns can attract penalties and prevent future revised filings.
  • A social and moral duty that reflects responsibility towards the country 

We have compiled a list of common errors one could make while filing their ITR. Be it taxpayers or learned professionals, it is essential to remember these common mistakes while filing ITR. 

Mistake 1: Late Filing 

The deadline for filing ITR is usually July 31st of the assessment year, but it can be extended as per the government order. However, missing the due date for or not filing returns can lead to several punitive measures or even legal proceedings by the Income Tax Department (ITD). 

Mistake 2: Using The Wrong ITR Form

Using the wrong ITR form while filing tax returns is a common mistake that can lead to rejection by the ITD. It’s important to note that using the wrong form may result in a defective return, requiring you to file a revised return using the correct form. To avoid this, it’s important to choose the correct form based on the sources of income. 

Mistake 3: Providing Incorrect Information or Omitting Essential Information

It is important to provide accurate personal information, including bank details and personal information when filing an ITR to avoid any issues with the processing of tax refunds. Failure to provide correct information can result in delays. 

It is also important to disclose all domestic and foreign bank accounts, income sources, and properties to avoid penalties and legal action. Submitting false bills, such as rent receipts or medical bills, to claim HRA can also lead to fines and a tax audit.

Mistake 4: Not Mentioning Income From All Sources

When filing income tax returns, you must disclose all your sources of income, including exempted income and income from sources such as rent, dividends, capital gains, and interest from fixed deposits and savings accounts to avoid an income tax audit.

Mistake 5: Ignoring Form 26AS

Before filing your ITR, it is vital to check Form 26AS, which includes your income, Tax Deducted at Source (TDS), advance tax paid, and tax credits. This information must be cross-checked with the employer’s Form 16 to avoid discrepancies. 

Mistake 6: Not paying advance tax

Advance tax must be paid when filing the tax return to avoid interest charges. Taxpayers with additional sources of income are required to pay advance tax even if TDS has been deducted. The difference between total tax liability and TDS should not exceed a certain threshold amount. If it does, interest will be levied.

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