Common Errors to Be Avoided While Filing ITR

Filing the ITR in the right way is important for income tax compliance. The taxpayer needs to take care of his/her income, deductions, tax payment, bank details, and other necessary information while filing the return.

1. Choosing Wrong ITR Form

An incorrect selection of the ITR form is one of the most common errors that people commit while filing the return.

For the correct choice of the ITR form, the following things need to be taken into account:

• Nature of the taxpayer
• Residential status
• Type of income
• Income from business/profession
• Capital gains
• Applicable conditions

Taxpayer needs to check whether the ITR form selected by him is applicable or not before filing the ITR.

2. Failure to Include All Sources of Income in the ITR

Sometimes, taxpayers don’t report all their incomes in the ITR form.

This includes:

• Salary
• Pension
• Income from house property
• Income from business/profession
• Capital gains
• Interest income
• Dividends
• Income from other sources
• Applicable income

3. Not Comparing Form 26AS

Form 26AS holds all the tax related information such as TDS and TCS details.

The taxpayer must match Form 26AS with:

• Form 16
• Form 16A
• TDS details
• Tax payment
• Income details

It is very important to make a comparison before the filing of the return.

4. Not Comparing AIS and TIS

The taxpayers need to review their Annual Information Statement (AIS) and Taxpayer Information Summary (TIS).

AIS and TIS may contain the information like:

• Interest income
• Dividend income
• Securities transaction
• TDS
• TCS
• Financial information

It is very important to reconcile the above information with the actual information before filing the return.

5. Inaccurate Reporting of TDS

Inaccurate reporting of TDS will lead to mis-matching of ITR with the information that exists with the Income Tax department.

It is necessary for the taxpayer to check the following:

• TAN of deductor
• Amount of TDS
• Income where TDS is deducted
• TDS in Form 26AS
• TDS in AIS

6. Not Considering Interest Income

Interest income from savings bank accounts,

fixed deposits,

recurring deposits,

other deposits, etc.

must be properly considered at the time of preparation of ITR.

7. Incorrect Bank Account Details

Having incorrect bank details can pose complications especially in situations where a taxpayer is anticipating a refund for his or her income tax.

A taxpayer needs to ensure the following:

• Bank account number
• IFSC
• Account holder’s name
• Bank account verification
• Income Tax e-filing portal bank account details

8. Incorrect Deduction Claims

The taxpayer needs to make claims for deductions where he or she is entitled to do so under the prevailing provisions.

Some common deductions include:

• Under Section 80C
• Under Section 80D
• Under Section 80G
• Other deduction claims as applicable

The taxpayer must have adequate documentation of deductions claimed.

9. Incorrect Capital Gain Reporting

All capital gains arising from sales and transfers of assets must be reported accurately.

Information which should be verified includes:

• Sale value of the asset
• Cost incurred in purchasing the asset
• Date of purchase
• Date of sale
• Type of capital asset
• Provisions of capital gains
• Taxable capital gain

10. Not Reporting Foreign Income Or Assets As Required

Where a taxpayer has foreign income or foreign assets, it would be important to carefully scrutinize the relevant reporting requirements.

• Foreign income
• Foreign bank accounts
• Foreign investments
• Other foreign assets as required

11. Incorrect Classification of Business or Professional Income

It is important that the business owner or professional takes care of the correct classification of his/her income and expenditure in the preparation of the ITR.

Some relevant documents for verification could include:

• Books of Accounts
• Sales
• Purchase
• Expenses
• Bank Statements
• GST
• TDS
• Others

12. Incorrect Reconciliation of GST and ITR

In case of any relevant GST, it is important for the taxpayer doing business or profession to do the reconciliation of his/her GST data with the income tax data.

The taxpayer needs to check the following:

Books of Accounts → GST Returns → Bank Statements → Tax Records → ITR

Any differences must be checked before filing the return.

13. Incorrect Tax Calculation

If there is any wrong calculation of taxable income or the tax liability, then the taxpayer will have to pay extra tax or may not get the correct refund.

The taxpayer should cross-check the following:

• Total Income
• Exemptions
• Deductions
• Taxable Income
• Tax Rates Applicable
• Rebate
• TDS
• TCS
• Advance Tax
• Self-assessment Tax
• Tax Liabilities

14. Not Comparing the Tax Regimes

Where there is an option of choosing between the two regimes, the taxpayer should compare the tax liabilities under both the tax regimes before filing the return.

The comparison can be done as follows:

Income → Exemptions → Deductions → Taxable Income → Tax Liability

15. Incorrect Details of Advance Tax or Self-Assessment Tax

Taxpayers should verify the tax payment information of taxes paid in the relevant year.

Some of the taxes to be verified are:

• Advance Tax
• Self-Assessment Tax
• TDS
• TCS

16. Failing to Report All Sources of Income

It is a mistake on the part of a taxpayer to think that salary or only major income sources need to be reported.

Instead, other incomes (wherever applicable) should also be taken into consideration, such as:

• Interest
• Dividend
• Capital gain
• Rental income
• Business income
• Professional income
• Other taxable incomes

17. Not Verifying the ITR after Filing It

Filing an ITR does not conclude the process for a taxpayer.

Verification of the return by the taxpayer after the filing process has to be done.

Not completing verification within the stipulated requirements can affect the validity or processing of the return.

18. Not Maintaining Supporting Documents

Relevant documents and records supporting the information filed in ITR have to be maintained by the taxpayer.

The documents can be:

• Form 16
• Form 16A
• Form 26AS
• AIS
• TIS
• Bank statement
• Investment proof
• Capital gain statement
• Rent record
• Loan interest statement
• Tax payment challan
• And other relevant documents

19. Incorrect Personal Details

Personal details have to be verified by taxpayers prior to submitting the ITR.

It includes the following:

• PAN
• Aadhaar details
• Name
• Address
• Mobile number
• Email address
• Bank details

20. Filing the Return without Proper Reconciliation

One of the most important mistakes in relation to filing of an ITR is doing so without proper reconciliation of the available information.

A simple process for reconciliation could be:

Income Records → Bank Statement → Form 16/16A → Form 26AS → AIS/TIS → Tax Computation → ITR

Proper reconciliation will help in finding out discrepancies like:

• Missing income
• Incorrect TDS
• Incorrect tax payments
• Duplicate entries
• Incorrect deductions
• Bank related issues
• And other errors

Common ITR Filing Mistakes – Quick Checklist

Prior to filing an ITR, a taxpayer has to check the following:

☑ Correct ITR form chosen

☑ All incomes reported

☑ Form 26AS checked

☑ AIS checked

☑ TIS checked

☑ TDS verified

☑ TCS verified

☑ Bank details checked

☑ Deductions verified

☑ Capital gains verified

☑ Business/Professional income verified

☑ Tax liability computed correctly

☑ Tax regime compared where required

☑ Advance tax verified

☑ Self assessment tax verified

☑ Refund details verified

☑ ITR filed correctly

☑ ITR verified after filing

☑ Acknowledgement obtained

Conclusion

Making mistakes while filing an ITR can have serious consequences. A taxpayer has to take care not to make any mistakes while preparing his ITR.

Correct reconciliation and proper reporting can aid taxpayers in uncovering such discrepancies and minimize any possible unnecessary tax compliance problems.

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