Filing an Income Tax Return (ITR) might appear straightforward thanks to the rise of DIY platforms and e-filing portals. With a few clicks, you're promised ease, speed, and cost savings. But behind the simplicity lies a much more complex reality-especially if you're not well-versed in tax laws. One wrong entry, an overlooked detail, or a misinterpretation could lead to everything from notices to penalties or prolonged assessments. Let's unpack some commonly overlooked errors that self-filers make and why expert advice often ends up being the smarter, cheaper route in the long run.
AIS: More Than Just a Reference Sheet
Many taxpayers brush past the Annual Information Statement (AIS) thinking it's just a summary of TDS or interest earned. In reality, it's a detailed map of your financial year-covering mutual fund activity, dividends, rent, trading, and much more. If your ITR doesn't line up with AIS data, chances are you'll hear from the tax department via a mismatch notice, and potentially face further scrutiny.
Just Because It's Not in AIS Doesn't Mean It's Not Taxable
AIS is extensive but not exhaustive. It won't always reflect foreign earnings, crypto trades, ESOPs, second house rent, or capital gains on unlisted shares. A frequent mistake among DIY filers is assuming what isn't visible to them isn't visible to the department. Spoiler alert: ignorance doesn't eliminate liability.
Choosing the Wrong ITR Form? Welcome to Trouble
Picking the incorrect return form is one of the most frequent and critical errors. For example, using ITR-1 when you have capital gains? That's a misfit. Or claiming HRA, LTA, or gratuity without understanding limits and exemptions? That could make your return defective, if not outright rejected.
Section Confusion = Deduction Disallowed
Even when the right form is chosen, misapplying deductions is another landmine. Whether it's Section 80C, 80D, or 80G, each comes with its own logic and limits. Calculations based on assumptions or missing paperwork can lead to your claim being ignored by the system or flagged by an officer.
Missed Loss Set-Offs? Say Goodbye to Tax Savings
Many taxpayers don't realise the value of carrying forward or setting off previous year's losses-especially for capital gains or business. Forgetting this or filing after the due date can result in losing the ability to use those losses ever again.
F&O Traders Beware-Turnover Isn't Sales
If you deal in Futures & Options, calculating turnover the wrong way could trip you into audit territory unknowingly. It's not about sale value-it's about absolute gains and losses, as per ICAI guidance. Misreport it, and you could end up skipping mandatory audits and risking penalties.
Set-Off Rules Are Rigid - No Freelancing Allowed
Not all income losses can be adjusted freely. For example, trying to offset house property loss against capital gains, or adjusting speculative losses against salary, is flatly disallowed. Missteps here can invalidate your return entirely.
Foreign Income? Schedule FA Isn't Optional
If you hold foreign assets, bank accounts, shares, or receive overseas ESOPs, these must be disclosed in Schedule FA, even if they didn't generate income. Failing to do so could lead to stiff penalties under the Black Money Act, up to ₹10 lakh per asset. And no, most DIY tools won't warn you.
TDS Mismatches: The Refund Killer
Another silent trap-unreconciled TDS. If your Form 26AS or AIS shows income or deductions you've not included, expect refund delays or demand notices. TDS must match both Form 16 and your declared income down to the rupee.
No Paper Trail = No Defense
You might file correctly, but if you can't support your deductions or claims with workings, bills, or justifications, you're exposed during assessments. Professionals usually keep detailed supporting documentation a safety net that DIY filers lack.
ITR Filing Is Strategic, Not Clerical
Filing isn't just about data entry. It's your financial yearbook. The Income Tax Department uses algorithms to match, compare, and flag returns. Filing the correct return requires insight into what to report, how to report, and what to leave out.
Professional Advice = Risk Insurance
Sure, DIY saves upfront fees. But if your finances involve investments, trading, multiple incomes, foreign assets, or property, the risk of doing it wrong far outweighs the cost of professional filing. A tax expert doesn't just file-they reduce your tax bill, secure your profile, and keep you future-proofed.
Closing Thoughts: Cheap Today, Costly Tomorrow
Tax errors don't always show up immediately. But when they do, they can bring penalties, reputation damage, or legal action. If your financial situation isn't ultra-simple, don't gamble on guesswork. Think of hiring a professional not as an expense but as an investment in peace of mind.
Disclaimer: We request readers to seek professional advice before arriving at any decision/conclusion after reading. We are not responsible for any loss arising to anyone after referring and relying on this article. The above views are based on our understanding of the provisions.
The author can be reached at office.bhavikco@gmail.com
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