Top Mistakes to Avoid While Filing Your ITR
Filing Income Tax Returns (ITR) is a crucial financial responsibility for individuals and businesses alike. However, even seasoned taxpayers can make errors that lead to complications, penalties, or missed opportunities for refunds. In this blog, we will highlight the most common mistakes people make while filing their ITR and provide tips on how to avoid them. Understanding these pitfalls can help ensure a smooth and accurate tax filing process.
Common Mistakes to Avoid
Incorrect Personal Information
- Details: Entering incorrect personal information, such as PAN, name, address, or bank account details.
- Prevention: Double-check all personal details before submission. Ensure they match the records with your bank and the tax department.
Choosing the Wrong ITR Form
- Details: Selecting the wrong form based on your income source and type.
- Prevention: Refer to the official guidelines or consult a tax professional to determine the correct form for your specific situation.
Missing Income Sources
- Details: Failing to report all sources of income, including interest from savings accounts, fixed deposits, rental income, etc.
- Prevention: Maintain a comprehensive record of all income sources throughout the year and cross-check with Form 26AS.
Errors in Reporting Deductions
- Details: Incorrectly claiming deductions under various sections like 80C, 80D, etc.
- Prevention: Keep accurate records of all investments and expenditures eligible for deductions and consult with a tax advisor if unsure.
Ignoring Tax Benefits for NRI
- Details: NRIs often miss out on tax benefits due to lack of knowledge or incorrect filing.
- Prevention: NRIs should stay updated on specific tax rules applicable to them and seek professional advice.
Failure to Verify ITR
- Details: Not verifying the filed ITR either electronically or physically.
- Prevention: Ensure you complete the verification process within 120 days of filing your return.
Not Reconciling with Form 26AS
- Details: Discrepancies between income and TDS reported in Form 26AS and the ITR form.
- Prevention: Always reconcile your ITR with Form 26AS to avoid mismatches and potential notices from the tax department.
Incorrect Bank Account Details
- Details: Providing wrong bank account details, leading to delays or issues in refund processing.
- Prevention: Double-check your bank account number, IFSC code, and other details before submission.
Filing Returns Late
- Details: Missing the deadline for filing returns, resulting in penalties and interest charges.
- Prevention: Mark the due dates on your calendar and prepare your documents well in advance.
Miscalculating Tax Liability
- Details: Errors in calculating total tax liability, leading to underpayment or overpayment of taxes.
- Prevention: Use reliable tax software or seek professional help to ensure accurate calculations.
Real-Life Scenarios of Incorrect Filings and Their Consequences
- Scenario: Mr. Sharma, a salaried employee, incorrectly entered his PAN number while filing his ITR. As a result, his return was rejected, and he missed the initial deadline. This led to a penalty and delayed refund.
- Consequence: Penalty for late filing and stress of resubmitting the return.
- Prevention: Always verify personal details before submission.
- Scenario: Mrs. Rao, a freelancer, failed to report her bank interest income and received a notice from the tax department for underreporting income.
- Consequence: Had to pay additional tax along with interest and penalties.
- Prevention: Maintain a record of all income sources and cross-check with Form 26AS.
- Scenario: Mr. Patel, an NRI, filed his ITR using a resident taxpayer form, missing out on specific NRI benefits.
- Consequence: Overpaid taxes and needed to file a rectification request.
- Prevention: Ensure you use the correct ITR form based on your residential status.
Conclusion
Filing your ITR correctly is essential to avoid penalties, ensure accurate tax calculations, and potentially receive timely refunds. By being aware of these common mistakes and taking proactive steps to avoid them, you can make the tax filing process smoother and more efficient. For personalized advice and assistance, consider consulting a tax professional.
For further information or assistance with your ITR, feel free to contact
Adv. Avinash Ray & Adv. Supriti Bhargava
A&S Firm.
Financial Gupshup
7521819429
supriti0810@gmail.com
