How To Avoid 8 Common Deadly Mistakes During ITR Filing?

Individual and Hindu Undivided Families Constitutes major almost 97% of e-filers. It’s also true that this category prone to make mistakes while filling their ITR (Income Tax Return).

Reasons Could Be Any

  • Less Knowledge of Income Tax Act 1961, its rules and procedures.
  • Dependent on Cheap Income Tax Return Preparers, who file their Income Tax Return (ITR) just for Rs 500- Rs 1000/-.
  • Thinking this is just a formality to be completed. Its force work on their head by Government.
  • Less availability of Qualified Tax Professionals.

Your reason can be any of the above. Hope you will acknowledge that fact You are responsible for mistakes in your ITR, not the person who assists you in this.

Let’s understand 8 common deadly mistakes during ITR filing: –

  1. Choosing Incorrect ITR Form – The Income Tax Return Forms vary depending on the source of Income. There is 7 different Income Tax Return form in the public domain. Each form addresses a particular class of section.

    ITR Forms

    Section of People

    ITR -1

    For Individuals being a Resident (other than Not Ordinarily Resident) having Total Income up to Rs.50 lakhs, having Income from Salaries, One House Property, Other Sources (Interest, etc.),

    ITR- 2

    For Individuals and HUFs not having income from profits and gains of business or profession

    ITR 3

    For individuals and HUFs having income from profits and gains of business or profession

    ITR 4

    For Individuals, HUFs and Firms (other than LLP) being a Resident having Total Income up to Rs.50 lakhs and having income from Business and Profession which is computed under sections 44AD, 44ADA or 44AE

    ITR 5

    For persons other than-  (i) Individual, (ii) HUF, iii) Company and  (iv) Person filing Form ITR-7

    ITR 6

    For Companies other than companies claiming exemption under section 11

    ITR 7

    For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D)

    The use of incorrect form can result in the return being treated as defective. Such Individual / HUF (Hindu Undivided Family) are given intimation under section 139(9), Asking them to rectify the mistake within 15days.

    “If the error is not rectified, the return is treated invalid, and the Income Tax Department will deem it to be a case of non -filing”. 

2. Failure To Claim Deductions Not Mentioned In Form 16- Sometimes certain exemptions do not get reflected in Form 16. This can happen due to any reason
a) Proof of Investment late submitted
b) Tax Department at Company misses some investment account for.
c) Investment proof forgot to submit at all.
d) Proof of Investment submitted after the due date.

Don’t worry, it happens with many people. Income Tax allows Taxpayer option to claim deducted at the time of ITR filing, provided you have supporting documents. 

“Due to my tight travelling schedule, I forgot to submit proof of investment to my Company” Vishal Mahajan. Thanks to MyTaxDost team for helping me to get my refund of TDS excess deducted. Amount of refund was more than 80% of my monthly salary.

All money struck with the government due to late submission of proof and I lost hope to get a refund of excess TDS deducted.

“I forgot to submit stamp duty deduction on Purchase of Home to my accounts department, all due to less awareness” Manohar Manral. I Appreciate MyTaxDost team for educating me in Tax Saving Areas,

3. Income shown in return does not reconcile with Form 26AS- A discrepancy between income reported in Form 26AS and the return filed by the Assessee can lead to Income Tax Department making preliminary adjustment and sending a notice under section 143(1). The Assessee gets 30 days to respond online.

Therefore, you must update the correct email id with the department for all correspondence.

Sometimes the Assessee forgets or does not includes some income while filing the income tax return that been recorded in Form 26AS.

It’s recommended checking Form 26AS before filing your Income Tax return.

This exercise helps you to know about parties who have made delay or default in TDS deposit with the department.  This reconciliation is for benefit of the Tax department as well as Income Tax Payer.

4. Filling return after due date–Filling return after a due date not only impose late fee penalty under section 234F ranging Rs 1000 to Rs 10,000 as the case may be but also disallowance of carry-forward of Capital loss and Loss under the head “Income from Business and Profession”.

5. Interest on Saving Bank – Mostly Taxpayer file their Income Tax Return Basis Form 16 and Form 26As only.

The important point here, Interest on saving bank is not fully Exempt. Its partially exempted up to Rs 10,000  from Tax. Interest Income above Rs 10,000 is fully taxable.

However, in the case of Senior Citizen, Tax-free interest income is up to Rs 50,000.

Even you need to claim a deduction of Interest on saving bank under section 80TTA and Senior Citizen can claim deduction under Section 80TTB. 

Therefore, it’s recommended to check your Bank statement and calculate interest earn on saving Bank account and account for the same while filing your Tax Return.

Failure in reporting can result in escapement of Income and could attract harsh penalty and action from the Tax department.

6. Dividend Income – Income earned from dividend up to Rs 10 lacs in a financial year is exempted (up to 2019-20).

Many people, make a mistake by not reporting thinking its less than Rs 10lacs.

As per the Tax return form, it’s compulsory to intimate Tax-free exempted income also.

It’s for benefit of Taxpayers, to support their net wealth in case of Income Tax inquiry at a later stage.

7. Family pension – The pension amount received by the dependent (either Government or Private) is taxable with some exceptions and eligible to claim a deduction of Rs 15000 or 1/3 of pension, whichever is more.

In the case of a Private Company, Employee Provident Fund takes care of pension, provided a deceased person member of EPF.

This needs to be mentioned in ITR and return to be filed accordingly.

8. Interest on Tax Refund – The tax department pays interest on the refund amount to compensate for the delay in the release of the Refund. Interest so received by Taxpayer is liable to Tax under income from other sources.

The taxpayer needs to check Form 26As in details and Intimation of refund under section 143(1) of the Income Tax Act.

However, to overcome this common mistake, the Tax department has made this amount auto-populated in Income Tax return.

You need to be cautious, in case it, not auto-populated. It’s your moral and legal duty to mention the same in your Tax return and pay tax on the same if applicable.

Hope, you have not committed any of above 8 Mistake while filing your Income Tax return.

In case you have committed any of the above mistakes. Then the only solution is to file a Revised Income Tax return as early as possible.

You can consult with us by opting for our consultancy services.

 MyTax Dost Provide – ITR Filling services also. You can opt for our services.

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