9 Common Mistakes That You Must Avoid While Filing ITR

The deadline for filing ITR is approaching fast and this is the time when many taxpayers made mistakes in their ITR filing process. Filing your income tax return (ITR) accurately and on time is essential for every taxpayer. It not only ensures compliance with tax laws but also helps you take advantage of deductions and exemptions to minimize your tax liability. However, the process can be daunting, and even small mistakes can lead to penalties or unnecessary complications. To help you navigate the ITR filing process smoothly in 2023, we have listed down a list of 9 common mistakes to avoid. 

1. Selecting the Wrong ITR Form

Different forms are assigned to different types of taxpayers. For instance, ITR-1 is designated for resident individuals with income up to Rs 50 lakh, encompassing income from salary, one house property, and other sources. 

On the other hand, ITR-3 is applicable to individuals with income from business or profession, while ITR-4 is tailored for those opting for the presumptive method of taxation, such as freelancers. It is crucial for taxpayers to exercise caution when selecting the appropriate Income Tax Return form.

Selecting an incorrect form can render the ITR form 'defective.' This may prompt a notice requesting revised returns, and failure to respond within the stipulated timeframe can result in your returns being considered non-compliant.

 2. Incorrect Personal Information:

When it comes to filing your income tax return (ITR), paying close attention to your personal details is of utmost importance. Thoroughly reviewing and verifying your personal information, such as your name, address, and contact details, is crucial to ensure accuracy in your tax filing process. Even a minor mistake or typo in these details can result in a range of issues and delays in the processing of your return.

First and foremost, it is essential to double-check your name for any misspellings or incorrect initials. Ensure that your address is accurately mentioned, including the correct postal code. Additionally, carefully verify your contact information, such as your phone number and email address, as this will be used for communication by the tax authorities.

3. Choosing the Wrong Assessment Year in ITR

One common mistake to avoid while filing your income tax return (ITR) is selecting the wrong assessment year. It is crucial to choose the relevant assessment year to ensure accurate filing and avoid unnecessary penalties or complications.

The assessment year refers to the year in which your income for a particular financial year is assessed and taxed. It is important to note that the assessment year is always the year following the financial year for which you are filing the return.

4. Not Considering All the income sources.

When preparing your Income Tax Return (ITR), it is crucial to take into account all your sources of income. This includes income from both your current and previous employment, as well as any income generated from investments. Accurately reporting your income is vital, and using the appropriate ITR form for your specific situation is important.

Failure to report any income from a previous job can lead to a mismatch between the information provided in your TDS certificate (Form 16) and your Form 26AS. This discrepancy may catch the attention of the tax department, resulting in a tax demand notice being issued to you. This notice will require you to pay any additional tax dues that may be applicable based on the unreported income.

5. Neglecting Form 26AS:

Another common mistake to avoid while filing your Income Tax Return (ITR) is neglecting to review Form 26AS. Form 26AS is a consolidated tax statement that provides an overview of the taxes paid on your behalf by employers, banks, or any other deductor. It is essential to verify this form with your own records to ensure the accurate reporting of taxes paid.

Form 26AS contains crucial information such as TDS (Tax Deducted at Source) details, advance tax payments, self-assessment tax payments, and any other tax credits. By reviewing this form, you can cross-check the information with your own records, such as Form 16, bank statements, or payment receipts, to ensure that all taxes paid are accurately accounted for.

6. No reporting of income from investments such as interest income

It is important for taxpayers to report their interest income accurately in their Income Tax Return (ITR). This includes interest earned from various sources such as fixed deposits, savings accounts, post office saving schemes, bonds, and other investments.

For taxpayers below the age of 60, it is crucial to report the interest earned from savings accounts as well. The good news is that taxpayers in this age group are eligible for a tax deduction of up to Rs 10,000 on the interest income from savings accounts.

7. Failing to Maintain Proper Documentation:

Another common mistake to avoid while filing your taxes is failing to maintain proper documentation. It is crucial to keep all relevant documents organized and easily accessible. This includes bank statements, investment proofs, rent receipts, medical bills, and any other supporting documents related to your income, deductions, and expenses.

Proper documentation serves as evidence and support for the claims you make in your Income Tax Return (ITR). In the event of scrutiny or verification by tax authorities, having well-maintained records can help substantiate your claims and ensure compliance with tax regulations.

8. Waiting for the last minute to file your ITR

Filing your income tax return at the last moment is not a prudent decision. It increases the risk of missing the deadline due to incomplete documentation or lack of necessary information required for filing.

Moreover, waiting until the last moment may also lead to technical glitches or delays on the income tax department's website. As the deadline approaches, there is a surge in visitor traffic, which can cause website congestion and hinder smooth filing. To avoid such issues, it is advisable to start the tax filing process well in advance.

9. Not Reviewing the ITR Before Submission:

Taking the time to thoroughly review your ITR is essential to identify any errors or omissions that may have occurred during the filing process. 

By carefully reviewing the details, you can spot and rectify any discrepancies in numbers, calculations, or information provided. It is important to cross-check the data with supporting documents, such as Form 16, bank statements, and investment proofs, to ensure consistency and accuracy. 

A thorough review also ensures compliance by reporting all sources of income, claiming eligible deductions, and providing accurate information about investments and financial transactions. Taking this extra step will help you maintain compliance, maximize tax benefits, and have confidence in the accuracy of your ITR.

Also Read: Changes in Income Tax Return Forms for FY 2022-23 (AY2023-24) impacting ITR filing: 3 key updates

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