As the deadline for filing the Income Tax return nears with the due date set for July 31, 2024, taxpayers need to guard against committing any last-minute misstep in their ITRs. Everyone should be careful at the time of return filing and try to enter correct information. “These days many people especially salaried individuals file ITR themselves but there are chances that some mistakes may happen,” says CA Ashish Niraj, Partner, A S N & Company, Chartered Accountants. Mistakes in the ITR form submission can render your return void, even subjecting the individual to penalties and legal action in some cases. Given the myriad of allowances, deductions, clauses, and regulations, it is possible that you can get overwhelmed by the complexities of IT laws. Following are a few common errors that you should avoid while filling your ITR.
Selecting the Wrong ITR Form: Taxpayers are needed to provide all taxable and tax-exempt income sources by filling out the appropriate ITR form. Filing an incorrect ITR form can lead to a return being labelled as ‘defective.’
“For Example, someone who is a director in any company or startup needs to file ITR 2 but many times they file ITR 1 which is wrong. Also, those having more than 50 Lakhs Income are required to give details of their Assets and Liabilities which can only be reported in ITR 2 or ITR 3,” informs CA Niraj.
Non-Reporting of FD (Fixed Deposit)/Savings Interest or Dividend Income: Some taxpayers may end up overlooking reporting interest income from savings bank accounts, FD, and other such sources under the ‘Income from other sources’ option in their ITR. Income from savings accounts is taxable when it exceeds Rs. 10,000 annually. The interest received has to be first mentioned in the head ‘Income from other sources, and then deduction on savings account interest can be claimed under section 80TTA if you are below 60.
“As AIS and 26AS have all such details and in case assessee misses these in his returns department may send a notice it will mismatch with 26AS and AIS data of the department,” says CA Niraj.
Non-Reporting of Capital Gain: Taxpayers often miss out on reporting capital gains from switching mutual fund units often go unreported as these transactions don’t appear in bank statements and do not find a mention in the ITR.
“All Capital Gain must be reported whether on shares, mutual funds, land or buildings, or any other assets. Many people miss to report these,” shares CA Niraj.
Clubbing of Income: The income of the minor child except for some exceptions, is required to be clubbed with the income of the parents. “Many people are not aware of it and file ITR with their own income only.”
Caution With Personal Details: Taxpayers need to be vigilant while putting in their details such as PAN, Aadhaar, mail ID, contact number, and residential address details.
Many Individuals enter the wrong address or email/Mobile Number Aadhar Number etc. by mistake which is required to be corrected through a revised return.
Missing Income of Last Employer: “Many Individuals switch jobs during the year. Many times they forget to ask their previous employer about their Form 16 and enter only their current employer’s Form 16 details in ITR. All employers' details are required to be entered in ITR, any mismatch will lead to a Notice to the taxpayer,” CA Niraj informs.
Missing Deductions & Keeping Proof: Some returns on investments are tax-free while others are taxable. Therefore, such deductions need to be cautiously claimed in order to avoid the IT department’s scrutiny of your ITR. While claiming the wrong deduction is one thing, some taxpayers may even miss out on claiming the right ones.
“Some People miss some deductions to be claimed which can be claimed by filing revised returns,” CA Niraj says.
In addition to this, make sure you provide correct evidence/proofs of expenses/ investments in your ITR as this could lead to the disallowance of deductions without adequate evidence and increases the chances of scrutiny of your ITR.
Wrong Revenue or Expenditure details: “Business Persons sometimes file their ITR without properly reconciling all sales and expenses which is discovered later. These are required to be reported and corrected by filing revised returns. Also while reporting revenue their GST Data should also be reconciled,” CA Niraj informs.
Not incorporating all Income as appearing in 26AS Correctly: Form 26AS provides information regarding the TDS deducted and deposited to the IT department in a taxpayer’s name. It gives insights into details about the TCS collected and taxes that are being paid during the financial year against the given PAN number.
“Sometimes individuals report interest etc. from bank statements but the figures in their 26AS remain different. Reconciliation with 26AS is necessary to avoid a mismatch,” CA Niraj highlights.
Exempt Income Non-Reporting: All Income whether Taxable or Exempt is required to be reported if a person is liable to file an ITR. Many times taxpayers forget to include exempt income while filing their ITR.
Avoid these common mistakes while filing your tax returns to avoid unnecessary penalties or scrutiny by the income tax department. Sometimes even a small mistake while filing an ITR can land you in trouble with the IT Department.
