Introduction
As the closing dates of FY 23.24 AY 24.25 has been arrived i.e 31/03/24 & after finalisation of books of accounts the Due date of filling Income tax return is not too far i.e 31st July 2024.
In the world of Taxation where there is so many provisions, sections, deductions & rules which will complicate the process of Filling income tax return which might have a negative impact on the outcome of filing returns.
Let's highlight some of common mistakes that one should avoid while Filling Income tax returns.
Common mistakes may arise while filling Income Tax returns
Selection of Incorrect ITR Form
As we know while filling Income tax form one have to select an appropriate ITR Form on the basis to nature of income earned Choosing the wrong ITR form may lead to the return being treated as defective or make the ITR Invalid altogether. Therefore, choosing the correct ITR form is essential hence Assesse should select appropriate ITR Form.
Furnishing Wrong details
Assesse must be aware while furnishing details regarding PAN, Aadhaar, and address details. Special attention should also be given when mentioning the mail id and contact number. You must ensure that the details tally with those in your PAN. As while filling ITR it will be e verified by OTP verification hence it is important to provide appropriate contact number.
Wrong bank account details
Every year many refunds are not processed for incorrect personal details like name, bank account number, IFSC code, and address. Many taxpayers unintentionally provide wrong bank details & these common mistakes in filing income tax returns can delay your income tax refund. Hence an Assesse must submit correct & Pre-validated bank AC details.
Fail to reconcile with AIS TIS
As we know while Filling of ITR an Assesse his to bifurcate his total earnings into various heads as directed under income Tax Act & one has to claim deductions & exemptions for the same As Income tax portal will provide a basic Information containing your Total Income derived through your permanent account number (PAN) & will give you brief of the earnings for the selected FY. An assesse must check with AIS (Annual Information Statement) & TIS (Taxpayer's Information Summary) Which is available on the e-filing portal itself.
Fail to reconcile with 26AS
As while filling of Income tax return an Assesse has to claim the Credit of Tax deducted at source (TDS) or Tax collection at source (TCS) from tax liability which will reflect in the form 26AS as it is important to reconcile the same before claiming credit of TDS/TCS.
All incomes included in Form 26AS must be reported, as these details are already there with the tax department. In case of any mismatch, the tax filer may be sent a notice. A mismatch in Form 26AS and Form 16 may also lead to lesser refunds received by the taxpayer.
Not checking bank statements
An assesse must check the Bank statement whether it contains any other income like Gift , interest or any other income which is liable to tax. Avoidance of such kind of income may result into issuance of notice from Tax authorities.
Not disclosing all jobs
If an Assessee has switched multiple jobs then he should disclose every income earned from each job if any income is unreported, a discrepancy will be shown in the TDS certificate and form 26AS. In the new format of Form 16, a separate row is given where the income from another employer needs to be mentioned, if any.
Not disclosing Exempt Incomes
As while filling ITR sometimes Assesse ignores Incomes to be reported which are not liable to tax.
Ex. Income from a life insurance policy that is tax-free under Section 10(10D) or Gifts received from the relatives like fathers, mothers, brothers, or sisters is exempt. Still, all these incomes must be reported in the tax form.
Delay in filling
It is important to file ITR with in due date as delaying will result into various circumstances like losses can not be carried forward, late fees & interest will be applicable.
Not disclosing all properties
As we know under the Head Income from House property where an Assesse own more than 2 properties he can choose 2 properties as a Self occupied on his choice & remaining will be considered as Deemed let out & liable to tax under House property. Hence sometimes Assesse intentionally hide some of his Properties to evade the Tax which might face serious consequences upon filling.
Fake proofs for deductions
As we know from the computed income there is so many deductions available for an Assesse sometimes it can be seen that an Assesse will generate fake receipts & invoices to claim such kind of deductions such as LIC receipts to claim 80C,Fake RENT receipts to claim HRA , Fake medical bills to claim 80D. Kindly avoide this things As this will lead to notices from the department.
Not linking PAN with Bank AC
As many income tax refunds are issued directly in the Bank AC it is important to know that refund will issue in the PAN LINKED ACCOUNT only hence it is important to link your pan card with your bank account
Choosing wrong residential status
As the first step to determine taxability is to decide the residential status of taxpayer as in different scenarios will arise in different status hence it is important to determine Residential status correctly.
To determine one has to check the Days whether an Assesse has stayed in India for 182 days in the PY to check whether Assesse is resident or not , further one need to check additional condition under section 6(6) to determine ordinary resident or not.
Why it is important to avoid mistakes?
Income tax returns must be filled with due care as any negligence will end up to seriously penalties, interest & notices ex. If an individual files ITR using a form that does not apply to him, then the tax officer, while processing the ITR form, may consider the return so filed as a defective return under the provision of section 139(9) of the Income Tax Act and send the notice u/s 139(9) as defective return notice.
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