Author: PEAK Business Consultancy Services | Category: Income Tax Return Filing in India
Filing your Income Tax Return (ITR) is a crucial financial task every year. Whether you’re a salaried employee, a freelancer, or a small business owner, accurate and timely ITR filing ensures compliance with Indian tax laws and allows you to claim refunds or carry forward losses. However, many taxpayers commit common errors—some minor, some serious—that can lead to notices, rejections, penalties, or delayed refunds.
This guide highlights the most common mistakes made during ITR filing in India and how you can avoid them effectively.
1. Choosing the Wrong ITR Form
One of the most frequent mistakes is selecting an incorrect ITR form. For example, salaried individuals with capital gains must use ITR-2 instead of ITR-1. Filing the wrong form can result in a defective return.
How to avoid: Understand your income sources and choose the correct ITR form. If you’re unsure, get assistance from our tax experts to avoid re-filing.
2. Mismatch with Form 26AS or AIS
Many taxpayers file returns based on Form 16 or salary slips but forget to cross-check against Form 26AS and Annual Information Statement (AIS). This leads to mismatches and potential scrutiny notices.
How to avoid: Always reconcile your reported income and TDS with Form 26AS and AIS before filing.
3. Not Reporting Interest Income
Interest earned on savings accounts, fixed deposits, or recurring deposits is taxable. Many people skip declaring this income, leading to underreporting.
How to avoid: Collect interest certificates from banks and include all interest income under “Income from Other Sources.”
4. Forgetting to E-Verify the Return
Filing is incomplete unless you verify your return within 30 days. Many taxpayers forget this step, and their return becomes invalid.
How to avoid: E-verify using Aadhaar OTP, net banking, or send the ITR-V to CPC Bangalore within the stipulated time.
5. Skipping Foreign Asset Disclosure
Resident taxpayers with overseas assets or income must disclose them in Schedule FA. Failing to do so could result in penalties and prosecution under the Black Money Act.
How to avoid: If you’re a resident Indian with foreign holdings, consult with our professionals to ensure full compliance.
6. Not Disclosing Exempt Income
Exempt incomes such as agricultural income, PPF interest, and maturity proceeds from life insurance policies must still be reported under the “Exempt Income” section.
How to avoid: Declare all exempt income properly to maintain transparency and avoid data mismatches in automated profiling.
7. Claiming Ineligible Deductions
Some taxpayers claim deductions under Sections like 80C or 80D without proper proof or eligibility, which can be disallowed upon scrutiny.
How to avoid: Only claim deductions you’re entitled to and maintain documentation for every exemption and deduction claimed.
8. Ignoring Clubbing of Income
If you’ve invested in your spouse’s or minor child’s name, the income earned may be clubbed with your income. Many forget to account for this.
How to avoid: Understand clubbing provisions under Section 64 and report accordingly.
9. Not Reporting All Bank Accounts
Taxpayers are required to disclose all active bank accounts held in India while filing their returns, even if unused.
How to avoid: List every account correctly, and mark one account for tax refund credit.
10. Failing to File on Time
Filing after the due date (typically July 31st for most individuals) can lead to penalties under Section 234F and loss of several benefits like carry-forward of losses and interest on refund.
How to avoid: Keep your documents ready early and file your ITR on time with expert help.
11. Not Declaring Capital Gains Properly
Short-term and long-term capital gains from shares, mutual funds, or property must be reported accurately. Incorrect computation can lead to audit or reassessment.
How to avoid: Use broker statements, CAS, and property sale deeds to compute gains and apply indexation if required.
12. Overlooking Advance Tax or Self-Assessment Tax
If your tax liability exceeds ₹10,000, you must pay advance tax. Some people ignore this and end up with interest liabilities under Section 234B/C.
How to avoid: Compute your total tax liability and pay any balance via challan ITNS-280 before filing.
How OurTaxPartner.com Helps You Avoid These Mistakes
- We ensure accurate form selection based on your income profile.
- We reconcile Form 26AS, AIS, and income proofs.
- We help you claim maximum deductions legally.
- We ensure timely filing and e-verification.
- We offer notice handling and audit support services.
Filing ITR the right way is crucial. Let our team file your return accurately and on time.
Conclusion
While filing your ITR might seem easy thanks to digital platforms, these common errors can cost you time, money, and peace of mind. Taking expert guidance ensures compliance, maximizes tax savings, and protects you from future complications.
Let professionals handle it for you. File your ITR confidently with OurTaxPartner.com today.
Need help fixing previous errors or planning this year’s ITR? Visit www.ourtaxpartner.com/filing-service/income-tax-efiling to speak with a certified tax consultant.
