According to the recent data gathered from the Income Tax Department, more than one crore income tax returns (ITRs) were filed till 26 June. The last date for filing ITR is July 31. The tax department said through a Tweet that this year the milestone of 1 crore reached 12 days earlier compared to last year. The taxpayers are advised to file their returns as soon as possible and not to wait for the last day. However, taxpayers need to be aware of the common mistakes that are committed often by many. In this article, we have listed some of the errors to be avoided while filing an ITR.
Top Common ITR Filing Mistakes: Effects & How to Avoid Them
Here are some common errors which you can avoid when filing an income tax return:
Missing the Deadline for Filing ITR Returns
No matter what the reason is, you may be careless or a sluggish person, but this is one of the most common mistakes many taxpayers make. For individuals, the last date of filing ITR is 31 July of the assessment year. The Government may extend it.
If you miss the deadline, you have to pay penalties including a late fee of up to Rs. 5000, and penal interest of 1% per month on any unpaid taxes. And, your refunds for excess tax paid may get delayed.
Choose the Wrong ITR Form
Selecting the incorrect is also a common mistake. It may happen by mistake or lack of knowledge of the portal.
ITR Return is Not Filing
The consequences of not filing an ITR at all may be far more severe than being late. The following penalties could apply if your ITR is not filed.
- Tax debt penalties are calculated from the due date until the ITR is filed.
- A penalty equal to about 50% of the tax avoided, payable in addition to the applicable tax due.
Not Pre-Validating Bank Account
Pre-validating the bank account is essential when filing income tax returns, especially if individuals want to receive a tax refund for any excess tax paid. The Income Tax Department won’t be able to credit the income tax refund that is due to you if this is not fulfilled.
Form 16 & 26AS are Not Properly Verify
It is crucial to verify whether Form 26AS and the Annual Information Statement (AIS) are accessible. You can get both the Forms on Income Tax Department’s e-filing portal https://eportal.incometax.gov.in
Make sure that the information of tax deducted at source (TDS) and specific high-value transactions match with your Form 16, bank account statements and other financial records. In these transactions cases deposits, fixed deposits, immovable property transactions etc. can be included. As authorities are very conscious about figures and data in Form 26AS, so make it free from error or any discrepancy. Otherwise, it may lead you to deal with the Income Tax Department’s notice.
While going through your Form checking, if you find any error in the Forms, approach the tax deductor for rectification. For example, banks that withhold TDS on the interest earned on fixed deposits.
Filing the Wrong Personal Details
When providing required personal information in their income tax returns, taxpayers occasionally make mistakes. To avoid this, double-check the filled information.
choosing the incorrect assessment year
Not Verifying ITR
Forgetting to double-check your income tax return is a common tax filing error. Frequently, taxpayers are not aware of this inaccuracy until they receive a notice from the Income Tax Department. Correcting this error may be time-consuming. Currently, after completing the finished ITR form, taxpayers have 30 days to verify their ITR.
Taxpayers Get Confused Between A.Y. & F.Y
The term “financial year” describes the time frame in which income is generated. The Assessment Year, however, is the year that comes after the Financial Year in which tax returns are submitted. For the current tax filing, you need to select the assessment year 2023–24.
Not Revealing All Sources of Income
It is essential to disclose all sources of income when filing income tax returns. Even if you work for a salary, you can have supplemental income from a variety of sources, including dividends from equity shares, capital gains, rent from residential or commercial property, interest from savings or fixed deposit accounts, and more. Even if the income is exempt from taxation, it is still necessary to disclose all of these sources of income and provide information about them when filing an ITR.
Revised ITR is Not Filing
By submitting a revised ITR, assesses can correct mistakes in their initial returns, according to the Income Tax Department. The Income Tax Department permits assessees to correct mistakes in their first returns by submitting a revised ITR after the income tax return (ITR) is filled out. Even if you are attentive, filing errors for tax returns such as unintentional omissions, incorrect deductions, and even misleading disclosures may still occur.
Fortunately, these errors can be quickly corrected by submitting a new ITR. Before the Income Tax Department finishes its assessment or before the end of the assessment year, you should submit your revised return.
You are now allowed to file an unlimited number of revised returns. However, limiting the adjustments will lessen the chances of in-depth examination by the tax authorities.
Having said that, if you made a mistake when submitting your first returns, you must use this feature. It is preferable to correct your error by filing a revised return rather than getting a notice from the Income Tax Department.
After all, tax authorities may view even little errors as income hiding, leading to fines and other penal interest charges.
Time Period of Job Change By Employers
If you changed jobs during the fiscal year, make sure to include in your ITR all income from both your present and previous employers.
Not Disclosing Capital Gains and Losses
When reporting ITRs, many taxpayers do not disclose information about capital gains and losses. However, this mistake could lead you to face severe consequences.
Current tax regulations require taxpayers to report all capital gains and losses when filing their ITR. According to tax professionals, previously, it was difficult for tax authorities to find cases of not mentioning capital gains. Tax officials are now better able to detect such cases thanks to enhanced technologies.
Taxpayer Get Fail to Pay Advance & Self-Assessment Tax
Typically, Tax Deducted at Source (TDS) is withheld from both Salaried Income and Interest Income obtained from the Bank. However, there are instances where taxpayers are considered under the 30% tax bracket, and the TDS on their interest income is either deducted at a rate of 10% or not deducted at all.
In such cases, it becomes necessary to calculate the additional tax payable and remit it as advance tax. Similarly, for Rental Income, it is essential to evaluate the tax liability and make advance tax payments under the relevant legal provisions. Self-Assessment tax is settled during the filing of the tax return.
Consequently, all the required details relevant to self-assessment and advance tax payments must be provided in the Income Tax Return filing.
Fake Invoices Submitted by Taxpayers
The majority of fake invoices pertaining to deductions are allowed under Sections 80C, 80D, etc. of the Income Tax Law, including receipts from LIC, medical expenses, rent receipts, etc. It is not acceptable to provide fictitious invoices or rent receipts to get HRA (House Rent Allowance). Despite the actual invoices costing less, there have been cases where people exaggerated the worth of the bills.
By examining the bank account information or double-checking with the vendor or landlord, the Income Tax Department can quickly identify these fraudulent bills.
Final Words
You should be aware of these common mistakes while filing your income tax return. By filing ITR keeping all the above-mentioned things in mind, you may avoid unnecessary hassles such as worrying about income tax notices, paying hefty fines, or facing penal interest charges. It is highly recommended to file your ITR with SAG Infotech’s best Gen ITR filing software as per government guidelines or with the income tax portal to avoid this kind of mistake. If you use the software, you will be able to easily file your income tax return without getting any problems.
