ITR filing errors: Ten mistakes people do while filing their taxes

ITR filing mistakes: Avoid these common errors

1)Failure to meet the deadline for filing returns

One common mistake is not submitting your income tax return (ITR) by the due date, which for individuals is 31st July of the assessment year unless extended by the government. 

“However, if you fail to file your ITR by the due date, you will face penalties:

– Late fee of up to ₹5,000

– Penal interest of 1% per month on any unpaid taxes

– Delay in receiving refunds for excess tax paid,” said Archit Gupta, Founder & CEO, Clear.

2)Not filing ITR

Not filing your ITR at all can have even more severe consequences. Failure to file your ITR may result in penalties.

“The repercussions of these legal actions can be significant and include:

– Penal interest on tax dues calculated from the due date until the filing of ITR

– Penalty of around 50% of the tax avoided, payable in addition to the applicable tax due,” said Archit Gupta.

3) Selecting the Incorrect ITR Form

One of the most common mistakes when filing an ITR is using the wrong ITR form. 

4) Failure to pre-validate your bank account

When filing income tax returns, it is crucial to pre-validate the bank account, especially if taxpayers are expecting a tax refund for any excess tax paid. If not done, the Income Tax Department will not be able to credit the income tax refund owed to you.

5) Forgetting to verify your ITR

A common tax filing mistake is forgetting to verify your income tax return. Often, taxpayers only realize this error when they receive a notice from the Income Tax Department. Rectifying this mistake can be time-consuming and costly.

Currently, taxpayers have 30 days to verify their ITR after submitting the completed ITR form.

6) Providing incorrect personal information

Sometimes, people make errors when providing critical personal information in their Income Tax Returns. Examples of such mistakes include:

7) Selecting the wrong assessment year

Many taxpayers confuse the terms “Assessment Year” and “Financial Year.”

The “financial year” refers to the period during which income is earned. Whereas, the Assessment Year is the year following the financial year when tax returns are filed. Archit Gupta said that in order to remember this distinction, keep in mind that the Assessment Year always comes after the Financial Year. Therefore, for the current tax filing, you should choose the assessment year 2023-24.

8) Not declaring income from all sources

When filing Income Tax Returns, it is crucial to disclose all sources of income. Even if you are a salaried individual, you might have additional income from various sources, such as rent from residential or commercial property, interest from savings or fixed deposit accounts, dividends from equity shares, capital gains, and more.

Disclosing all these income sources and providing their details is mandatory when filing ITR, even if such income is exempt from tax. 

9)Job change disclosure

Additionally, if you changed jobs during the financial year, ensure that you disclose income received from both your current and previous employers in your ITR.

10) Neglecting to disclose capital gains and losses

Many tax filers omit details of capital gains and losses when submitting their ITRs. However, this mistake can have serious consequences.

“According to current tax rules, taxpayers must disclose any and all capital gains or losses when filing their ITR. Previously, the omission of capital gains was challenging for tax authorities to track down. However, with improved systems, tax authorities are better equipped to identify such omissions,” said Archit Gupta.

Updated: 28 Jun 2023, 02:49 PM IST