Mistakes to Avoid while Filing Income Tax Returns

Mistakes to Avoid while Filing Income Tax Returns

28 Feb 2019

The number of mistakes made by taxpayers during the annual tax-filing ritual has reduced over the years because of the shift to online tax filing and a full-fledged automation of the tax filing process. However,given the sensitivity and importance of the information furnished, a single mistake or error could invite trouble.

To ensure that you do not get into unwarranted hassles with the Income Tax department, we list below some common glaring discrepancies which you need to safeguard against:-

1. Inaccurate Personal Details – Always consider details like Aadhaar card number, address and name while filing your IT returns. Ensure that you avoid missing out on your tax credit or income tax refund by verifying important facts such as bank account details, name, address and the amount of tax to be paid.

2. Filing incorrect ITR Form – One of the most common mistakes is using the wrong type of ITR. We advise you to read the instructions carefully before filing.As per the prevailing tax laws, an individual is required to report all sources of income and file the ITR using the correct form applicable to him. If he files it using the wrong form, then his filed return will be treated as 'defective' and he will be asked to file a revised ITR using the correct form.

3. No Verification of 26AS Form – Always take care of quoting the correct PAN that you give to your employer or others who deduct Tax at Source (TDS). Never forget to verify Form 26AS for the amount which has already been deposited by persons deducting tax on your behalf.

4. Failure to Claim Deductions – There are several deductions under section 80, including contributions to a charitable trust and PPF account management. Always consider the deductions that you are allowed in the ITR.

5. Non Reporting of Exempt Income– Mention exempted incomes like dividend income, agricultural income, etc in the given relevant annexures to Income Tax return forms.

6. Not reporting interest incomes - One should report all the interest incomes received or accrued in the previous financial year (for which the return is being filed) while filing the tax returns. Individuals generally forget to report interest earned from savings bank account, fixed deposits, recurring deposits, etc. under the head 'Income from other sources'.

7. Not filing income tax returns -Many people don't file their income tax returns because they have Long-Term Capital Gains (LTCG) which are tax-exempt and without this their gross total income is below the tax-exempt income level. However, as per the recent amendments in section 139 (1) of the Act, if your exempted LTCG along with gross total income exceeds the minimum exemption level, you are required to file your income tax return.

8. Not reporting all bank accounts - From the assessment year 2015-16, a taxpayer is required to report all the bank accounts held by him in previous years in his/her income tax returns. Earlier, you were only required to mention a single bank account in which you wished to receive credit of the income tax refund, if any. However, now only dormant accounts are excluded from the requirement of reporting in the ITR.

9. Failing to revise your income - If you have discovered any errors or discrepancies once your tax filing has been completed, then you must rectify your mistake by filing the revised return. Current income tax laws allow you two years to file the revised returns. However, from the financial year 2017-18, a taxpayer will get only one year after the end of the relevant financial year.

It is better to make an informed decision rather randomly filling returns; one should remember that even a small mistake can land you in trouble with the tax department. You could end up getting penalized or even be served a tax notice.

As the deadline to file your ITR approaches fast, it becomes all the more important that you take utmost care while filing the same.

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