5 mistakes to avoid while filing your ITR

Here is a list of the 5 most common mistakes you can evade while filing your income tax return.

Dec 17, 2020 11:12 IST India Infoline News Service

Filing income tax return (ITR) is a cumbersome process. This is why we must do everything in our power to avoid getting a tax notice and go through the whole procedure again. The chances of taking missteps and/or adding wrong information is significant since you are required to fill various details and follow different steps while filing your ITR. In order to help you to dodge the obvious potholes, here’s a list of the 5 most common mistakes you can evade while filing your return.



• Ensure that you have the right ITR form: There are a plethora of people from different backgrounds filing their taxes in a given year. Given the assortment of people filing their taxes, there are different forms for different tax payers. Depending on their residential status, heads under which their sources of income fall, level of taxable income, holding shares/ directorship in a company or member in a partnership firm, the forms will differ. For example, ITR-3 is applicable for income from business or profession and ITR-4 for the presumptive method of taxation such as for freelancers. If you file your return with the wrong ITR form, it is considered as invalid or not filed at all, and in such cases, you may get a notice from the tax department. Hence, its essential that you select the right ITR form.

• Confirm you have included all sources of income: One of the most common mistakes that tax payers make is leaving out some income sources erroneously.  While computing the ITR it is imperative to take into account all sources of income whether from the previous or current employment or income from investments and file it under the appropriate ITR form. Your investment, however small, must also be declared. As all the records are now integrated online, any mismatch in reporting of an income may put taxpayers under the scrutiny.

• Check for discrepancy in TDS details: Many of us file returns without verifying Form 26AS credit of TDS (tax deducted at source) held with IT Department.There could be a difference between the amount of tax credit you have claimed in your tax return and what is available in the records of the income tax authorities.TDS may not have been deposited with the department by the deductor or is not reflected in your Form 26AS.Before filing return, it is important to reconcile your income with that reflected in Form 26AS and Form 16/16A. In case of any discrepancy, inform the deductor to correct it from his end.

• Always claim the right deductions: There are various tax deductions available to income tax assesses under different sections such as 80C, 80D and 24(b). These deductions are available for investments or expenses.A number of times, taxpayers claim an incorrect amount or deduction under an incorrect section due to lack of technical knowledge, which results in variation of their tax liability.  The reverse is also possible; due to ignorance people miss out on opportunities for claiming income tax deductions. You may not have submitted tax saving investment proofs to the employer and hence the details were not recorded in your Form 16. However, even if investments were not declared to the employer, tax relief can still be claimed while filing income tax returns.

• Make certain to include exempt income: Income tax laws require a taxpayer to report all their income, whether exempt from tax or not. It is mandatory for a taxpayer to file his/her ITR if the gross income exceeds Rs2.5lakh or he/she satisfies certain conditions as mentioned under the law even if the total income is below Rs2.5 lakh.However, even if gross total income does not exceed minimum exemption limit, ITR filing is mandatory in certain cases such as, if an individual has deposited more than Rs1crore in current bank account(s) during the financial year or spent more than Rs2 lakh in foreign travel on self or any other person or if the electricity bill paid during the year exceeds Rs1 lakh. Also, it is mandatory to file ITR for resident individual if they are holding assets outside India or have interest in any asset outside India or are authorized signatories for bank accounts located outside India.

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