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Filing Income Tax Returns for Financial Year 2023-24: 10 ITR Filing Mistakes That Can Cost Taxpayers Dearly

Income tax return for financial year 2023-24: 10 ITR Filing Mistakes That Can Cost Taxpayers Dearly

A taxpayer may find it difficult to file an ITR if he does not have sound knowledge of taxes laws or if he files it without the help of a tax professional. Taxpayers are usually cautious and exercise due diligence while filing ITRs, but in their haste to file the returns before the due date, they make some serious mistakes.

Although mistakes have been made while filing the ITR are rectifiable, as one can correct any error by filing a revised return or filing a rectification petition, it requires additional time and effort from the taxpayers, and no one wants to spend double time on a single job.

“There is always a possibility of inadvertent arithmetic errors or omissions while filing an ITR, often due to the taxpayer’s limited knowledge of income tax. However, by paying a little attention, a taxpayer can significantly reduce or even eliminate the chances of making mistakes,” says CA Rahul Singh, Senior Manager at Taxmann.

Below are some common mistakes that taxpayers often make while filing ITRs.

1. Do not file ITR

    One of the most common mistakes taxpayers make is not filing their income tax returns (ITR). Many think that they do not have to file a tax return if their income is not taxable/exempt or if tax has already been deducted from their income.

    However, the rule is that an individual taxpayer has to file an ITR if his gross taxable income exceeds the basic exemption limit. This limit is Rs 3 lakh for people over 60, Rs 5 lakh for people over 80, and Rs 2.5 lakh for all others.

    Also read: 10 things to do while filing ITR to avoid income tax returns

    2. Using wrong ITR form

    CBDT has notified seven ITR forms for different classes of taxpayers. “Choosing the right ITR form depending on the class and nature of income of the taxpayer is the first and most important step in filing an ITR. If you file an ITR in the wrong ITR form, it will get the status of invalid return,” said Singh.

    3. Bank account not validated

    The Income Tax Department requires taxpayers to pre-validate their bank accounts on the e-filing portal to enable immediate crediting of tax refunds. This step ensures that the account is active and owned by the taxpayer, minimizing errors and fraud.

    4. Cannot verify ITR electronically

    After filing an income tax return, its verification by the taxpayers is a mandatory step to complete the filing process. If a return is not verified after filing, it will be treated as an invalid return. The Tax Authorities do not process unverified returns.

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

    5. Not claiming eligible deductions

    Taxpayers often forget to claim deductions for which they are eligible. For example, if you have interest income from a savings account, you can claim deduction under Section 80TTA. Under this provision, a deduction of up to Rs 10,000 is allowed.

    Similarly, if an employee is not receiving Housing Allowance (HRA), he can claim a deduction for rental payments under section 80GG. This deduction also applies to self-employed persons.

    6. Miscellaneous income is not shown

    Very often, many taxpayers do not reflect their miscellaneous income such as interest income and commission income in ITRs. A few think that these small incomes are not taxable, while some of them think that reporting these incomes is not required as TDS has been deducted from them. However, this is not the true picture.

    “A taxpayer must report all sources of income in an ITR, irrespective of whether it is taxable or exempt income. If these incomes are not declared, taxpayers may find themselves in trouble with the IT department,” Singh warns.

    7. Delay in filing ITR

    Taxpayers have to pay mandatory late filing fees under section 234F, which may range from Rs. 1,000 to Rs. 5,000 if the returns are filed after the due date. The due date for filing ITR for FY 2023-24 in case of individuals who are not required to get their books audited is July 31, 2024. So, file the ITR within the time frame to avoid paying late fees.

    8. Reconcile earnings with AIS

    Checking your Annual Information Statement (AIS) while filing your Income Tax Return (ITR) is crucial to ensure accuracy and avoid income discrepancies. The AIS provides information on various financial transactions that taxpayers carry out during the year.

    This ensures that everything is correct and that you haven’t missed any sources of income. If you see something on the AIS that is wrong, you can provide feedback for the corrections.

    9. Check the TDS amount using Form 26AS

    Form 26AS contains details of all taxes deducted/collected at source from your PAN. “If you find any discrepancy in the TDS shown in Form 26AS, you should inform the tax deductor and ask him to correct it. The Income Tax department only takes Form 26AS into account while you get TDS credit. So, it could deny the benefit of TDS claim in ITR if it is missing from Form 26AS,” informs Singh.

    10. Club income from previous employer

    If you have changed jobs Make sure you report income from your previous jobs during the fiscal year. Your tax liability may change because all your income is added together. It may also be that your old employer has deducted taxes. So check everything carefully and pay the correct amount of tax before filing your tax return.