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Introductions: 

It is a mandatory task for taxpayers in India to file Income Tax Return (ITR) every year. Although the process may seem simple, individuals often make mistakes that can lead to unnecessary complications or penalties. Whether it’s providing incorrect personal information or incorrectly calculating taxable income, understanding and avoiding these common mistakes is important to ensure that filing of ITR is done easily and accurately

In this blog post, we will delve into the most common mistakes that taxpayers often face while filing ITR forms in India By knowing these pitfalls and taking precautions to avoid them, you can for you Improve accuracy of filing ITRs, reduce potential tax evasion and maintain compliance with existing tax laws.

ITR: 

ITR abbreviated as Income Tax Return is an important document that individuals have to file with the Income Tax Department. This form is important for taxpayers as it compels disclosure of income for the entire financial year, facilitates calculation of tax liability or facilitates tax return where applicable. Details of sources of income, claim deductions, taxes, and other relevant financial details have been carefully entered in the ITR form

The filing of ITR is a legal process which should help the government in assessing and collecting taxes properly. Additionally, it gives taxpayers the right to declare their income, that is, reduced deductions and claim benefits in accordance with the tax regulations.

Mistakes to Avoid When Filing ITR:

Missing The Due Date: 

One of the mistakes in filing ITR is missing the due date. The prescribed deadline for filing Income Tax Return (ITR) for individuals is usually July 31 in the assessment year. however, this deadline may be further extended based on government guidelines. However, failure to file your Income Tax Return (ITR) by this time will attract penalties

It’s important to make sure you file on time to avoid penalties and fees, as failure to do so can result in: 

• There is a late fee of up to Rs. 10,000 .
•  Penal interest of 1% per month applicable to any unpaid taxes.
•  Delay in receiving a refund for any excess tax paid.

Choosing  wrong ITR form:

One of the most common ITR filing mistakes is using the wrong ITR form. Submitting an incorrect form results in an erroneous filing which can be rejected by the Income Tax Department.

The choice of ITR form mainly depends on  source of income. For example, if you are a salaried person, you can choose to file return using the ITR form 1 but if you are a salaried person and you also earn income from capital gains in the form of investments, you will need to file an ITR  form 2  is used.

Conversely, if you are self-employed and earn income from business profits, you will need to file ITR Form 3 for your return.

Wrong Assessment Year: 

Many taxpayers often get confused about the terms “assessment year” and “financial  Year.” The term “financial year” refers to the period or year in which income is earned.

For example, if you file your ITR on or before July 31, 2023, you’re reporting income earned between April 1, 2022, and March 31, 2023. This timeframe, spanning from April to March, constitutes the Financial Year 2022-23, abbreviated as FY 2022-23.

The Assessment Year is the year succeeding the Financial Year, during which tax returns are filed. For instance, if you submit your tax returns in June or July 2023, the assessment year would be 2023-24.

Providing Incorrect Personal details:

In some cases, mistakes can occur when providing crucial  personal information that you need for your income tax returns.

It is important to ensure that you show your details like name, address, email ID, phone number, PAN and date of birth accurately in your income tax return. It is important that these details match the details provided in your PAN. Also, if you are planning to submit a refund, it is important to accurately disclose your bank details including account number and IFSC code to facilitate processing of your refund for you in a timely and hassle-free manner.

Not Providing All Bank Accounts:

One of the most common mistakes is not providing all bank accounts. Many taxpayers have multiple bank accounts, but a substantial proportion of submitters fail to include all their bank accounts in their ITR. This exception violates income tax laws, as all taxpayers are obliged to disclose their bank account details

This disclosure requirement was introduced several years ago with the primary goal of reducing money laundering activities. Current tax law also mandates the disclosure of details of all bank accounts closed during the financial year.

Failure to mention all sources of income: 

Be sure to disclose all sources of income when filing your income tax return. Even as a salaried employee, you can earn money from different sources. Although your salary is basic income, there are other sources such as income from residential and commercial properties, interest from fixed deposits, dividends in cash, capital gains, etc. 

It is mandatory to mention all these types of income and their effects in your ITR return, even if such income is tax free. Also, if you change jobs during the financial year, make sure you disclose income from both your current and previous employers in your ITR.

Not Filing  Income Tax Returns: 

The most common ITR filing mistakes Missing the deadline for filing returns is detrimental, but failing to file your ITR altogether is even more severe. Neglecting to submit your ITR can prompt the Income Tax Department to initiate legal proceedings against you.

The consequences of such legal actions can be significant, e.g. Penalty interest on the  tax dues , calculated from the due date till the filing of ITR. A minimum penalty of 50% of the tax evaded, payable in addition to the remaining applicable tax. Possible 3 to 7 years in prison.

Neglecting to claim deductions and exemptions:

Taxpayers often overlook qualified tax deductions and exemptions, such as those for home loan interest, medical expenses, or charitable donations, and when claiming tax deductions from clarification of available inclusion and exemptions can help reduce taxpayers’ taxes.

Tips to Avoid Making Errors :

Below are some tips to help you avoid errors when filling out ITR forms:

• Read the instructions and instructions enclosed with the ITR form carefully to fully understand the sections, lines and requirements before proceeding with filling the form
• Ensure that you enter all your personal details including name, address, PAN (Permanent Account Number), bank account details accurately. Errors in personal data can cause problems with processing or communication. 
• Additionally, be sure to report all sources of income, including salaries, employment income, rental income, capital gains, and interest Review your financial records carefully to ensure that you have properly accounted for all income for the entire financial year.
• Collect all relevant documents including Form 16, Form 26AS, bank statements, proof of deposits, and any other supporting documents relating to your income, deductions and taxes paid. Having all the necessary information readily available will ensure that you will be honest when filling out the form.
• Before submitting the ITR form, check all the details carefully and cross verify the details with your supporting documents. Check for omissions, errors, or inaccuracies. Double-checking your work is a good practice to reduce errors and ensure accuracy.
• Online tax applications provide step-by-step instructions, automated calculations and verification checks to help ensure accuracy in filling up the ITR form and reduce errors These forums often provide error checking materials for included to quickly alert you to any discrepancies or missing information.

Conclusion:

Filing an Income Tax Return (ITR) in India can be a daunting task, as even a small mistakes or oversight can have significant consequences. But by being vigilant about personal details, choosing the right ITR form, reporting all sources of income accurately, carefully calculating income and deductions, carefully creating accurate information environment, you can reduce the risk of errors and subsequent complications Can provide valuable guidance and validation checks to ensure accuracy throughout the process.