PROSPERR.IO

Filing your Income Tax Return (ITR) can feel like a daunting task, especially if you're not a tax whiz. While most taxpayers strive for accuracy, the pressure to meet the due date can lead to careless errors. These mistakes, though rectifiable, can cause unnecessary stress and cost you money in the form of penalties and delays.

Here, we'll explore 10 common ITR filing mistakes and how to avoid them, ensuring a smooth and hassle-free tax filing experience.

10 Common ITR filing mistakes to Avoid

1. Skipping the ITR Filing Altogether

This might seem like the easiest option, but it's a costly mistake. Not filing your ITR when it is mandatory can lead to hefty penalties, processing delays for future tax refunds, and even impact your credit score. Remember, you're obligated to file an ITR even if your income falls below the taxable limit or if tax has already been deducted at source (TDS). There are various reasons why someone might not be required to file an ITR, so be sure to check the latest government guidelines for the financial year (FY) in question.

2. Missing the Due Date

The due date for filing your ITR varies depending on your tax filing category. Generally, for salaried individuals and those filing ITR 1 or ITR 4 (for income from business or profession), the due date falls on July 31st of the assessment year. Late filing attracts a penalty that increases with the delay. To avoid this, consider filing well before the deadline to avoid any last-minute glitches.

3. Inaccurate or Incomplete Information

Furnishing inaccurate or incomplete information in your ITR is a recipe for trouble. This includes typos, discrepancies in income figures, or missing details about deductions and investments. Double-check all your entries against your Form 16 (provided by your employer) and other relevant documents. Remember, the tax department can scrutinize your ITR, ask for clarifications or levy penalties for any mismatched information.

4. Not Claiming All Eligible Deductions

The Indian tax system offers a range of deductions to reduce your taxable income. You can reduce your tax liability by taking advantage of these deductions. Common deductions include those for investments like PPF, life insurance premiums, medical expenses, and home loan interest payments. Make sure you understand all the deductions you're eligible for and claim them accurately in your ITR.

Here's a table outlining some of the common deductions you can claim while filing your ITR:

5. Ignoring Form 16 Mismatches

Form 16 is a crucial document issued by your employer that summarizes your salary income and TDS deducted for the financial year. Reconcile the figures in your Form 16 with the income you report in your ITR. Any discrepancies can lead to processing delays or penalties. If you find any errors in your Form 16, get them rectified by your employer before filing your ITR.

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6. Forgetting About E-verification

E-verification is the process of electronically verifying your ITR filing with the Income Tax Department. It's a mandatory step for most taxpayers and needs to be completed within a specific timeframe after filing. There are various ways to e-verify your ITR, including using your net banking credentials, Aadhaar OTP, or a digital signature certificate. Not e-verifying your ITR can render your filing invalid.

7. Not Keeping Records

It's essential to maintain proper records of all your income documents, investment proofs, and tax-related receipts for at least a few years after filing your ITR. These documents might be required in the event of any scrutiny by the tax department. Having a well-organized filing system can save you time and hassle in the long run.

8. Filing the Wrong ITR Form

There are different ITR forms designed for various taxpayer categories. Selecting the incorrect form can lead to processing delays and potential penalties. The Income Tax Department website provides detailed guidance on choosing the right ITR form based on your income sources.

Know about Tax Slabs and Understand Which Tax Regimes is best for you (AY 2024–25). 

9. Not Claiming Tax Refunds

If you've paid more tax than you owe, you're entitled to a tax refund. Ensure you claim it while filing your ITR. The tax department will process your refund after verifying your return. Delays can occur due to errors in your ITR filing.

10. Overlooking Miscellaneous Income

Remember to declare all sources of income in your ITR, even if they seem insignificant. This includes interest earned on savings accounts, rental income, capital gains, and freelance income. Omitting any income source can be flagged by the tax department and lead to penalties.

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Conclusion

By familiarizing yourself with these common ITR filing mistakes and taking steps to avoid them, you can ensure a smooth and accurate tax filing experience. Remember, a little planning and attention to detail can save you significant time, money, and stress in the long run.

[Disclaimer- The article is only for educational purposes and is not to be construed as tax advice. The relevant provisions of the Income-tax Act may be referred to, for complete understanding.]