ITR Filing 2023-24: Mistakes in Filing ITR can cost Taxpayers heavily

Filing ITR can be difficult for a taxpayer if he doesn’t have sound knowledge or if he is filing his income tax return without the help of any tax professional. Although, taxpayers stay careful and exercise due diligence while filing ITR. But when in a hurry to submit the tax return before the due date, there is a chance they can make a serious mistake.

Though mistakes in ITR filing are correctable, as any mistake may be corrected by filing a revised return or submitting a rectification request, it demands more time and effort from taxpayers, and no one likes to work twice as hard on the same job.

There is always the chance of unintended arithmetic errors or omissions when filling an ITR, which is generally owing to the taxpayer’s lack of knowledge of income tax. However, by paying close attention, a taxpayer can considerably decrease or even eliminate the possibility of making mistakes in their return.

Some common mistakes taxpayers make when filing ITRs are given below:

Not Filing ITR

One of the most common mistakes that taxpayers make is failing to file their income tax return (ITR). Many people believe they do not need to file since their income is not taxable/exempt or tax has already been deducted.

Individual taxpayers are required to file an ITR if their gross taxable income exceeds the basic exemption limit. This limit is Rs 3 lakh for individuals over 60, Rs. 5 lakh for those over 80, and Rs. 2.5 lakh for everyone else.

Choosing the wrong ITR Form

CBDT has issued seven ITR forms for various categories of taxpayers. The first and most important step in ITR filing is to select the appropriate ITR form based on the classification and nature of the taxpayer’s income. Filing an ITR in the incorrect ITR form results in an invalid return.

How to decide on the correct ITR Forms?

ITR-1

For individuals being a resident (other than not ordinarily resident) having total income upto Rs.50 lakh, having Income from Salaries, one house property, other sources (Interest etc.), and agricultural income upto Rs. 5 thousand.

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 upto Rs. 50 lakh and having income from business and profession which is computed under sections 44AD, 44ADA or 44AE and agricultural income upto Rs. 5 thousand.

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) only.

Bank Account not Validated

The Income Tax Department requires taxpayers to pre-validate their bank accounts on the e-filing portal so that tax refunds can be credited directly. This step confirms that the account is operational and controlled by the taxpayer, which reduces errors and fraud.

Failure to E-Verify ITR

After filing an income tax return, taxpayers must verify it in order to finish the filing procedure. A return that has not been verified after filing is considered invalid. The Income Tax Department does not process unverified returns.

E-verification must be completed within 30 days of uploading ITR.

Not revealing Miscellaneous Income

Many taxpayers fail to report miscellaneous income, such as interest and commission income in ITRs. Some believe that these small incomes are not taxable, while others believe that they do not need to be reported because TDS has been deducted. However, this is not the entire picture.

A taxpayer has to report all sources of income in an ITR, regardless of whether it is taxable or exempt income. Failure to disclose these incomes may result in issues with the Income Tax Department.

Not claiming Eligible Deductions

Many taxpayers forget to claim deductions for which they are eligible. For example, if you earn interest from a savings bank account, you can claim a deduction under Section 80TTA. A deduction of up to Rs. 10,000 is permitted under this provision.

In a similar way, if an employee does not receive a House Rent Allowance (HRA), he may deduct rent payments under Section 80GG. Self-employed individuals can also claim this deduction.

Delay in Filing ITR

Taxpayers must pay mandatory late filing fees under Section 234F, which can vary from Rs. 1,000 to Rs. 5,000 if returns are filed after the due date. Individuals who are not required to have their books audited have until July 31, 2024, to file their ITR for the financial year 2023-24. To avoid paying late fees, file the ITR within the specified time limit.

AIS Reconciliation

Checking your Annual Information Statement (AIS) while filing your Income Tax Return (ITR) is essential for ensuring accuracy and avoiding differences in income. The AIS contains information about various financial transactions that taxpayers make during the year.

This helps that everything is correct and that you have not overlooked any potential sources of income. If you notice an error on the AIS, you can submit feedback for the corrections.

Verify the TDS amount with Form 26AS

Form 26AS contains information about all taxes deducted or collected at the source against your PAN.

If you find an error in the TDS displayed on Form 26AS, you must tell the tax deductor and ask him to correct it. The Income Tax Department only considers Form 26AS when granting TDS credit to you. Therefore, it might deny the benefit of the TDS claim in ITR if the same is missing in Form 26AS.

Club Income from Previous Employer

If you changed jobs during the financial year, be sure to include prior income. Your tax liability could change since all of your incomes will be combined together. Also, your previous employer may have deducted taxes. So, before you file your return, double-check everything and pay the correct amount of tax.