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Mistakes One Should Avoid While Filing Income Tax Return (ITR)

With the increased reliability electronic or e- mode of ITR filling a large number of individuals choose to file their return on their own. While filing of Income Tax Return has several advantages but making minor mistakes may sometimes attract huge penalties so one should be cautious while filing his/her own ITR.

We will discuss some of the mistakes which one should avoid while filing his/her ITR.

1. Choose the correct applicable forms: The most common mistake that taxpayer often commits is to file an incorrect form for ITR. Basically, there are seven types of form which are applicable based on the nature of income or amount of earnings. The details of ITR forms are given below:-

ITR 1: Resident individuals having income below INR 50 lacs which is arising from salary, house property or other incomes including agricultural income upto INR 5000.

ITR 2: Every other income above INR 50 lacs that includes capital gains, income from more than one house property, foreign incomes, pensions, etc.

ITR 3: Individuals generating incomes from business & profession, turnover of business exceeding INR 2 crores, incomes earned by partners or director, incomes from unlisted companies etc.

ITR 4: Incomes exceeding INR 50 lacs, carry forward losses, incomes from unlisted shares, incomes earned by non-ordinary residents, foreign incomes etc.

ITR 5: Incomes earned from Limited Liability Partnership, Association of persons, Body of Individuals, artificial judicial persons, local bodies and many more.

ITR 6: ITR 6 is to be filed by the companies who don’t claim exemption u/s 11 of the income tax act.

ITR 7: ITR 7 is needed to be filed by persons who is required to fill their return under section 139(4A), 139(4B), 139(4C), 39(4D)

2. Disclosing the actual amounts under proper heads: It is essential to disclose the actual amount of incomes under the proper income heads.

There are total five heads of incomes which are as follows –

  1. Salaries
  2. House property
  3. Profits & gains of business and professions
  4. Capital gains
  5. Other sources.

3. Income Tax Return should be filed within the due dates : The taxpayer should always be cautious about the last date of filing the ITR.  Filling the ITR after due date which he/she will be liable to pay the interest u/s 234A which will be a simple interest of 1% per month or part of a month.

4. Filling correct information : The Taxpayer should always provide correct name, mobile no., email address, amount of income and their nature, PAN card Details etc. Which are needed to file an income tax return.

5. Details of all bank account which should be linked with the pan card : It is now essential by the income tax department to link all your bank account details with the pan card. The taxpayer must report all the bank accounts including DEMAT account which are operated by him/her within India or out of India.

6. Reconciliation of form 26AS with ITR returns: It is essential to match the amount of ITR filed with that of form 26AS. Form 26AS includes all the income details, Tax deduction at source (TDS), advanced tax paid, Self-assessment tax and many more. If he/she fail to comply with this rule then it can bring notice from income tax department for the same.

7. Claiming deductions if applicable: The taxpayer can claim a deduction up to INR 1.5 lacs in an assessment year under section 80 of the income tax act. A person generally gets confused while claiming deduction under the correct heads which ultimately leads to rejection.

8. Carry forward losses of previous year: The taxpayer have an option to carry forward the previous year losses from one source to the profits earned from another source of income under the same head or any other head in the present AY. For example, any loss earned from house property can be carried forward up to next 8 AY and can be adjusted under the same head only.

9. Filing revised return : In case of any rectification in previous ITR, revised return allows a taxpayer to rectify their mistakes of the previous Income Tax Return into his/her present ITR and the taxpayer may file the revised return before the end of the completion of the AY.