Filing ITR On Your Own? Here are 5 Mistakes You Need To Avoid
Avoid these common mistakes when filing your ITR to avoid getting a tax notice
It is the season of taxes. While a lot of services are available that help you file your taxes, you may also take the help of chartered accountants. However, some of us prefer to file taxes on our own. The process is relatively simple, but there are certain mistakes one needs to avoid so that there is no last minute stress. We take a look.
Not Disclosing All Sources Of Income
Last financial year, many taxpayers received income tax notices for sharing incomplete information.
“If you've switched jobs during a financial year, you must report this in your income tax return (ITR), along with income from both the previous and current jobs. Additionally, all other sources of income, such as interest from savings bank accounts, fixed deposits, and any gifts received, must be reported,” says says Abhishek Soni, CEO, Tax2Win, an income tax portal.
To ensure accuracy, always check your bank statements to account for any gifts, interest, or other income received.
Not Choosing The Right ITR Form
Selecting the incorrect ITR form can result in incomplete reporting of information, potentially leading to a defective income tax return. “Moreover, it may trigger a notice for underreporting of income. Therefore, it is essential to understand which form applies to you to ensure accurate reporting,” says Naveen Wadhwa, Vice President, Research and Advisory, Taxmann.
Form ITR-1 can be used by an Ordinary Resident (ROR) individual with a total income of up to Rs 50 lakh. This includes income from salary, one house property, and other sources such as bank interest, dividends, and agricultural income of up to Rs 5,000. “This form cannot be used by individuals who are either directors in a company, have invested in unlisted equity shares, or whose tax is deducted by banks on cash withdrawals under Section 194N. Those with deferred income tax on Employee Stock Option Plans (ESOPs) also cannot use this form,” says Wadhwa.
On the other hand, Form ITR-2 is for individuals who are ineligible to use Form ITR 1 and do not have any income falling under the head of “Profits or gains of business or profession.”
Forgetting To Check The AIS
Another crucial thing is to emphasise the importance of checking the Annual Information Statement (AIS) before filing the Income Tax Return (ITR). “The AIS provides a detailed summary of a taxpayer’s financial activities, encompassing various aspects such as interest on deposits, dividends, securities transactions, mutual fund transactions, foreign remittances, and interest on savings accounts,” says Wadhwa.
Taking the time to review this statement is essential for ensuring accuracy and minimising discrepancies.
Even minor omissions or mistakes can raise inquiries or notices from the tax department. Therefore, double-checking all the information is strongly advised to avoid such complications.
Not Checking For Discrepancies
If you do not want to get a notice from the income tax department while preparing your tax returns, it is essential to ensure that there are no discrepancies or inconsistencies, especially when it comes to the TDS credit claims.
“A mismatch between the TDS credit claimed in your return and the amount reflected in your Form 26AS can lead to a notice from the income tax department to inquire about the inconsistency. To avoid any such discrepancies, it is important to cross-verify the TDS credit claimed in your return with the amount displayed in your Form 26AS before filing your tax returns,” says Wadhwa.
Additionally, if you are a salaried employee and have failed to submit proof of deductions to your employer, you can still claim the deduction while filing your income tax return.
Failing To Verify Your ITR
“It is mandatory to e-verify your ITR within 30 days of filing. If you fail to verify it on time, your ITR will be considered invalid. You can e-verify your ITR via Netbanking, Aadhaar Card, or the EVC process on your mobile number and email,” says Soni.
Ensuring timely e-verification is crucial to validate your tax return and avoid any complications.
