Most Common Mistakes Made When Filing Income Tax Returns

[meghana B]

Filing your income tax returns by yourself can be a perplexing phenomenon, especially if you’re doing it for the first time. The recent trend in filing income tax returns is suggestive of a shift in the approach involved - most individuals and companies (mostly startups) take to filing income tax returns by themselves. While the trend is certainly appreciative, mistakes in filing returns are quite rampant. In the effort to file one’s own income tax returns, one must understand the common mistakes that are committed - by both individuals and startups. So let us go ahead and cite some common mistakes committed by people in filing income tax returns with a view to help you avoid them.

So what are some of the mistakes that you must look out for?

Incorrect TDS Claims

While filing income tax returns, taxpayers are required to disclose their Tax Deducted at Source (TDS) after conciliation of Form 16/Form 16A with Form 26AS. Else, an additional differential amount as tax needs to be paid.

Forgetting to send ITR V to the tax department

It has been identified that nearly 10% of people who file their returns unfortunately forget to send their ITR V form to the income tax department. This is something that can definitely be avoided. Once you file your returns, send your ITR V form to the following address: Income Tax Department CPC, Post Bag - 1, Electronic City Post Office, Bangalore 560200. However, from the year 2015-16, the department has introduced a new system where taxpayers are not required to manually send the ITR V form.

Checking Intimation and the Rectification Procedure

Once your income tax filings are processed and comparisons are duly made, you’ll receive an intimation from the tax department. If there is a mismatch, you are required to file a rectification application to clarify any mistake that might have occurred. A mistake most people make is failing to check the intimation notification and proceed with the rectification if necessary.

Incorrect IFSC and Bank Account Details

This is another common mistake people make. Note that bank account numbers and IFSC codes are basic forms of information to enable processing of your filings. Cross examining for accuracy is highly recommended in this regard.

Aadhaar Numbers, Foreign Assets and Passport Details

You are required to enter details of your Aadhaar and Passport, in case you hold these documents, as per the new Income Tax Rules that came into effect in June 2015. You are also required to correctly enter details of income from foreign assets. It has been observed that many taxpayers wrongly enter details of TAN, Residential Status and personal information. It must be note that:

• Wrong entry of TAN will not allow you to claim TDS.

• Incorrect DOB and Email id entry will attract wrong computations. Further, a wrong email id will result in non-receipt of intimation from the tax department.

• An incorrect residential address will attract higher taxes

• Another common mistake that taxpayers make is filing for excess deductions under various sections. A mismatch will lead to unpleasant occurrences.

Wrong Claim of Payment of Tax

Some assessees claim to have paid their income tax without actually making real payments towards their taxes. This will entail them being tagged as defaulters and will result in a payment of interest under section 220 and a penalty under section 221.

Selecting the Wrong ITR Form

This is perhaps the most common mistake that income tax payers commit when filing their returns. Below is information on the various ITR forms to avoid errors.

ITR 1: Meant for individual assessees who are salaried/pensioners, have one property(an immovable asset) and other sources of income that don’t include those from race horses and lotteries.

ITR 2: This form is applicable to individuals and HUF assessees who are salaried/pensioners, possess an immovable property (house) and also generate income through capital gains and foreign assets.

ITR 2A: IT is applicable to individuals falling under the previous category but don’t generate income through foreign assets.

Accurately filing one’s income tax returns is paramount to fulfilling our prerogative as citizens. Incorrect claims and mistakes will result in unforeseen situations that can sometimes be unpleasant. So, when filing your income tax returns, make doubly sure that you do not commit any grave errors.