Common Mistakes While Filing ITR

To err is human… but when it comes to income tax return filing, a minor error can mean real-world implications. So, it is important to file error-free returns and avoid any unnecessary penalties and liabilities. In this article, I’m sharing a list of the most common mistakes that people make while filing their income tax returns so that you can avoid making them.

The Incorrect Form Fallacy

Filing income tax returns might seem easy. But lots of individuals end up choosing the incorrect form. In this case the tax department might not process the return and they might send you a notice to rectify the mistake. 

So it is recommended to always choose the right form. In case you feel any issue you can consult with our tax experts by paying zero amount. Just fill up the contact form and our team will get back to you. 

Wrong Personal Info Entry

In your income tax returns, you must fill in your correct personal details like name, address, email id, phone number, PAN, date of birth, etc. All the details you enter in the form should tally with those given in your PAN. 

Also, if you are looking to claim a refund, make sure to accurately mention the bank particulars to which you intend your refund to be credited. This is crucial if you wish to receive your refund on time and without hassles.

Not Declaring All Sources of Income

When filing your income tax return, make sure to declare all your sources of income, which includes income from sources like salary, business profits, investments, rentals, capital gains, etc. You must declare all your income accurately and truthfully. Not doing so can have serious consequences in the future.

Make sure to do the following things when declaring all sources of income:

• Declare all your assets like fixed deposits, mutual funds, and insurance policies that you hold, including any in foreign banks and countries;
• Make sure that proper documentation is submitted for any gifts or donations that you may have received;
• Research and understand the taxable nature of the new kinds of investments;
• If you are running a business, maintain a separate ledger for tracking sales and purchases;
• Report any capital gains during the financial year on the sale or transfer or redemption of assets or investment securities;
• Make sure that you report bank interest and other cash flow from investments on which tax deductions are available.

If you correctly declare all your sources of income in the ITR filing process, you will avoid any interrogations from the tax authorities and maintain proper compliance with the Income Tax Act, 1961.

Not Reconciling 26AS Statement

Form 26AS contains the details of TDS deducted and deposited to the Income Tax department in a person’s name. It also includes details about the TCS collected.

All incomes included in Form 26AS must be reported since the income tax department already has these details.

If there is any mismatch, you as the tax filer may receive a notice. A mismatch in Form 26AS and Form 16 may also lead to you receiving a lesser refund.

So, make sure to check Form 26AS and ensure that all the details in it are updated and correct.

Not Understanding AIS & TIS Reports

AIS or Annual Information System is a tool launched by the Income Tax Department in India to collect information about an individual taxpayer’s financial transactions. In a financial year, you as a taxpayer receive income from different sources like salary, rental, interest income, etc. The AIS gathers data related to all these sources of income, the taxes deducted at source (TDS), taxes paid by you, and more such important tax-relevant information.

The AIS acts as an essential bridge between the taxpayers and the IT Department. It provides every taxpayer with a consolidated view of their tax credits, tax liabilities, and other relevant tax-related information. You can access this consolidated view through a document called Form 26AS. 

Similarly, TIS or the Taxpayer Information Summary is a statement that consolidates the tax information for a specific taxpayer that’s available with the IT Department. It is a summary of the taxpayer’s tax-related activities and provides valuable insights into their tax compliance.

TIS plays a vital role in the ITR filing process. By reviewing the TIS statement, you can verify the accuracy of your tax-related information and make sure that it aligns with the records maintained by the IT Department.

Not Verifying Details Before Filing

A very common mistake made by taxpayers and one that you can easily avoid - not verifying all details before filing Income Tax Returns. You must always review your information carefully before filing, to make sure everything is accurate and up to date. 

Make sure that you have filled in all the necessary fields and information accurately. Incorrect information can result in processing delays or rejection of your return. Recheck if the deductions and exemptions are accurate. 

Check the address and if there has been a change in your address since the previous year, make sure to update the same with the income tax department. 

By verifying all details before filing, you’ll be able to ensure accuracy, spot errors, and save time. 

Finally, you should double-check all the documents before submitting them to minimise errors and avoid rejections.

Even a small mistake while filing your income tax return can lead to you receiving a notice or paying a penalty. That’s why you must file your income tax returns with a lot of care and consideration. So to avoid any further complications, always follow the rules set by the government of India, file your returns accurately & on time, and keep all the necessary documents ready beforehand. 

Frequently Asked Questions (FAQ)