The due date for filing Income Tax Returns for FY 2022-23 is approaching fast, which is 31st July 2023. Last minute rush can sometimes lead to exposing incorrect information, which might have a negative impact on the outcome of filing returns.
Mistakes made when filing ITR make one’s returns invalid and may lead the person liable for penalty and prosecution. Filing an income tax return can either be tiresome or an easy process. It all depends on the knowledge and guidance one receives. With so many provisions, deductions, sections, etc., it is easy to get lost in the vast ocean of Income Tax.
Therefore, we have listed some of the most common ITR filing errors that tax filers make when filing returns. Our guide on common mistakes while filing income tax returns will guide you and help you avoid such mistakes.
Choosing the Right ITR Form
Choosing the right form when filing returns is important.
Forms ITR-1 to ITR-4 are usually relevant for individual taxpayers. For a salaried individual with total income of up to Rs 50 lakh in FY23, ITR-1 would be applicable. This form can also be used by those who draw income from other sources such as interest from bank/post office fixed deposits, agricultural income of up to Rs 5 lakh and one’s own house.
Using the wrong form will render the ITR form ‘defective.’ You could receive a notice to file revised returns and failure to respond in time will result in your returns being treated as invalid.
Not Disclosing Exempt Income
You are not required to pay tax on all your income. Some income, such as interest income from savings accounts, is exempt from tax. However, you still need to disclose this income in your ITR. If you do not disclose exempt income, you may be penalized.
Interest Income
Form 16 is an important document, but not the only one you can rely on while filing returns. Even if salary is your sole source of income, the fact is that you would be drawing interest income from deposits with banks. Even your savings account balance earns interest and it has to be offered to tax. The Annual Information Statement (AIS), too, reflects savings bank account details.
Make sure you check your bank account statements, Form 26AS and AIS to ascertain accurate information on interest income earned.
Selecting Wrong Assessment years
The assessment year is the financial year for which you are filing your ITR. It is important to select the correct assessment year for your return. If you select the wrong assessment year, your return may be rejected.
Forgetting to verify ITR
Once you have filed your ITR, you need to verify it. Verification is the process of confirming that the information you have provided in your ITR is correct. You can verify your ITR online or by post.
Not Filing Returns From Previous Employers
You need to be extremely careful while filing returns if you have switched jobs during FY23. Such individuals will have multiple Form 26 issued by their previous and current employers.
You will need to declare income earned from both organisations. The AIS captures all your income details, so data from both Form 16 will get reflected. It is best to be completely transparent to avoid tax notices due to the failure to declare all income.
You have to declare the income earned from both organisations. The AIS captures all your income details, so data from both Forms 16 will get reflected. It is best to be completely transparent to avoid tax notices due to the failure to declare all income.
Tips to Avoid Common Mistakes
- Take your time and carefully read the instructions before you start filing your ITR.
- Use the ITD’s ITR form selection tool to ensure that you are using the correct form.
- Review all your bank statements for the financial year before you file your ITR.
- Disclose all your income, including exempt income.
- Report all your interest income.
- Select the correct assessment year.
- Verify your ITR after you have filed it.
Way Forward
By following these tips, you can avoid common ITR filing errors. This will help to ensure that your return is processed smoothly and that you do not have to pay any penalties.
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