5 Common Errors to Avoid While Filing Income Tax Returns in India
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5 Common Errors to Avoid While Filing Income Tax Returns in India

Fri Jun 02 2023

Filing your income tax return (ITR) in India can be overwhelming, especially if you're not familiar with the process and regulations. Many taxpayers make certain common errors while filing their ITR, which can result in penalties, incorrect refunds, or even notices from the Income Tax Department. In this article, we'll discuss five common errors you should avoid when filing your income tax returns in India.

1. Choosing the Wrong ITR Form

One of the most common errors taxpayers make is selecting the incorrect ITR form. The Income Tax Department has different ITR forms for various types of taxpayers based on their income sources and other factors. Choosing the wrong form can make your return defective, requiring you to file a revised return.

2. Not Reporting All Income Sources

Another common error is failing to report all your income sources when filing your ITR. You must disclose all income earned during the financial year, whether taxable or exempt. This includes income from salaries, house property, capital gains, business or profession, and other sources like interest income, dividends, and rental income.

Reporting Exempt Income

Even if certain income sources are exempt from tax, you still need to report them in your ITR. Examples of exempt income include:

  • Dividend income from shares and mutual funds;
  • Long-term capital gains on the sale of equity shares or equity-oriented mutual funds (up to ₹1 lakh);
  • Agricultural income (subject to certain conditions), etc.

By disclosing all your income sources, you can avoid receiving notices from the Income Tax Department and ensure smooth processing of your ITR.

3. Not Reconciling TDS and Form 26AS

Form 26AS is a consolidated tax statement containing details of taxes deducted at source (TDS), tax collected at source (TCS), advance tax payments, self-assessment tax payments, and refunds received during the financial year. It's crucial to ensure that the TDS details in your Form 26AS match those in your Form 16 (issued by your employer) or TDS certificates (issued by banks and other deductors) to ensure that you receive credit for all taxes deducted and avoid any mismatches in your ITR.

Steps to reconcile your TDS and Form 26AS:

  • Download your Form 26AS from the Income Tax Department's e-filing portal.
  • Compare the TDS details in your Form 26AS with those in your Form 16 or TDS certificates.
  • If you find any discrepancies, notify the deductor (your employer, bank, etc.) and request them to rectify the errors.
  • Once the errors are rectified, the revised TDS details will be updated in your Form 26AS.

4. Providing Incorrect Personal and Bank Account Details

Providing incorrect personal information or bank account details in your ITR can cause delays in processing your return or receiving your refund. Make sure that your name, address, date of birth, PAN, Aadhaar number, email ID, and mobile number are accurately mentioned in the ITR.

To avoid this, one should remember that the personal details in your ITR should match those in your PAN and Aadhaar. If you're claiming a refund, double-check that your bank account number and IFSC code are correct because the Income Tax Department will directly credit the refund to your bank account. You need to report all your bank accounts held during the financial year, except dormant accounts, in your ITR.

5. Failing to E-Verify or Dispatch ITR-V On Time

Once you've successfully e-filed your ITR, it's crucial to e-verify your ITR-V (Acknowledgment) within 30 days of filing. The Income Tax Department will process your return only after verification. You can e-verify your ITR-V using one of the following methods:

  • Aadhaar-based OTP
  • Net banking
  • Electronic Verification Code (EVC) sent to your registered email and mobile number.

If you're unable to e-verify your ITR-V, sign and send it to the Centralized Processing Center (CPC) in Bengaluru via ordinary or speed post within 120 days from the e-filing date.

If you don't verify your ITR-V, your ITR will be considered not filed, and you may receive a notice from the Income Tax Department. If you fail to respond to the notice within the specified time limit, you may face penalties and non-filing fees. By promptly verifying your ITR-V, you can ensure that your return is processed and avoid any adverse consequences.

Conclusion

In conclusion, by avoiding these common errors when filing your income tax return in India, you can have a hassle-free and smooth experience. Remember to choose the correct ITR form, report all income sources, reconcile TDS and Form 26AS, provide accurate personal and bank account details, and verify your ITR-V on time. Using an e-filing platform such as Tax Nodes can help you avoid these errors and provide ease of filing your return. By doing so, you'll comply with tax laws, avoid penalties, and prevent notices from the Income Tax Department.

byAditi Mendiratta

Aditi is a corporate lawyer with a knack for writing that ranges from fictional stories to long-form legal content. Armed with a dual degree in law and mass communication, she aspires to put words to their best use to inform, educate and entertain.

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