12 Mistakes to Avoid While Filing Your ITR Online

This year, the last date for filing the ITR is fixed as 31st July 2022. There had been an extension in the ITR filing deadlines in the last two years due to the Covid-19 pandemic. But this year, you need to make sure you file your returns before 31st July as there will not be any extensions. In fact, it is advisable to file your ITR as soon as possible as the last date nears; the Income Tax website could hang because of the overload. Not filing the ITR before the deadline could result in several punitive measures, including a penalty of Rs 10,000, an additional 1% tax on the unpaid taxes, and a delay in receiving the excess tax.

2. Using the wrong ITR Form:

Many taxpayers make a common mistake of using the wrong ITR form, which results in a rejected filing by the IT department. Therefore, you should carefully select the ITR form when filing your ITR. Here are a few examples of ITR forms and who should use them:

ITR Form 1: Salaried individuals

ITR Form 2: Salaried individuals who have income from capital gains from investments

ITR Form 3: Self-employed individuals who have income from the profits of the business

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3. Not checking the Form 26AS:

Form 26AS contains information about your income; advance tax paid, Tax Deducted at Source (TDS), self-assessment tax paid, tax credits, if any, etc., making it a critical document. Sometimes there could be a mismatch between the information in Form 26AS and the employer's Form 16. Therefore, instead of blindly relying on the details of Form 26AS, it makes sense to cross-check them with the information in Form 16 before filing your ITR.

4. Selecting the wrong Assessment Year:

It is very common amongst taxpayers to get confused between the 'Assessment Year' and 'Financial Year' when filing the returns. The Financial Year refers to the year during which the income is earned. Whereas the assessment Year refers to the year that follows the financial year, during which the income tax returns are filed. So, for the current filing, you need to choose the assessment year 2022-23.

5. Providing the incorrect information:

It is possible to make typos or small mistakes when providing your critical personal information when filing your tax returns. The mistakes could be like providing incorrect PAN, email id, date of birth, bank details, etc. Bear in mind that some of these might look like silly mistakes, but they can have severe consequences. For example, providing incorrect PAN details may result in rejection of the ITR filing with penal interest charges and tax audit.

6. Not mentioning all the savings accounts:

Many of us hold multiple bank accounts, and it is mandatory to disclose the details of all your bank accounts in the ITR, including foreign bank accounts, if any. Furthermore, you are also required to disclose the details of the bank account closed during the financial year. This disclosure helps in reducing money laundering and related activities.

7. Not mentioning income from all sources:

There could be additional income from other sources besides your salary or business. It includes income in the form of rent from residential or commercial property, interest from fixed deposits, capital gains, etc. Sometimes taxpayers do not disclose all of their sources of income and only disclose income from their salary or primary business. As per law, you are required to disclose all of your sources of income. If you have changed the job in the financial year, you should also disclose income received from your previous employer. Besides, you should know that income received by a minor is treated as the parent's income. Therefore, make sure you include your minor child's income when filing the ITR. However, if a minor is earning income from work using special talent or knowledge, they must file income tax returns separately.

8. Not mentioning exempted income:

It is a common assumption amongst some taxpayers that they are not required to disclose the exempted income. In practice, you need to mention all the income, even if it is not taxable. As per law, the taxpayers are required to file an income tax return if the gross income exceeds Rs 2.5 lakhs, regardless of exemptions.

9. Not sending ITR-V to CPC:

If you are filing the income tax returns without an Aadhar-based verification and digital signature, then you need to send a signed copy of ITR-V to the Bangalore branch of the IT Department's Centralised Processing Centre (CPC) within 120 days of E-filing. If you fail to send the ITR-V to CPC, your filing will not be validated.

10. Not paying advanced tax:

Advance tax is applicable to individuals who have sources of income apart from their salary. It comes into play when the tax payable by the individual exceeds Rs 10,000 after deducting the TDS. So, if you are a salaried individual, you do not have to pay the advance tax because employers deduct the applicable tax from the salary in the form of the TDS. However, if you are a self-employed individual or if you have other sources of income apart from your salary, you are required to pay the advanced tax. Not paying the advance tax on time will attract an interest on the due tax.

11. Not verifying ITR:

Not all of us are income tax experts, and anyone can make these common mistakes. The income tax department is well aware of this fact and provides a period of 120 days after the Income Tax Returns deadline to verify it. Moreover, they will even notify you if they find any mistakes or errors. The ITR verification omits the chances of any errors or mistakes. The verification can be done through Aadhar OTP or an internet banking service. You can also send a duly-signed physical copy of your ITR to the IT department's Central Processing Centre (CPC).

12. Not filing a revised ITR:

The IT department allows you to rectify the errors or mistakes like incorrect or wrongful personal or financial information, incorrect deductions, etc., done in the ITR filing by filing a revised ITR. If you find any errors or mistakes while verifying your ITR, you should file revised income tax returns.

Final words...

Use this list of common mistakes when filing your income tax returns as a checklist to avoid any mistakes in your ITR. Filing a clean ITR without any mistakes will ensure your ITR gets accepted, and you avoid any penalties, income tax scrutiny, and filing of a revised ITR.s

Warm Regards,
Ketki Jadhav
Content Writer