An income tax return is an assessment of the income in a financial year, of a person by the Income Tax department of India. People should be vigilant about everything while filing for income tax returns. All the required documents and information should be correct and up to date. Even after being careful, there are high chances of mistakes being made. There can be certain common mistakes while filing income tax returns. 

Ten Common mistakes while filing income tax returns

Following are some of the mistakes  while filing income tax returns:

• Incorrect Income tax returns form

One of the most common mistakes is selecting the wrong ITR form. There are various kinds of forms according to the type of business or income level. Before filing ITR, one should be very careful about choosing the right kind of form for such purposes. 

• Delaying filing of Income tax returns 

Sometimes, the filing of income tax returns may get delayed due to various reasons but, always prioritize the income tax returns filing since delay in filing may attract fines and deprives the person of certain benefits which would have been available otherwise to them.

• Incorrect details in the form

While filing income tax returns, taxpayers might fill incorrect details. These incorrect details might lead to rejection of such form in case of mismatch in details.

• Not including all sources of income

1. The source of  income of a person is categorized into following:
2. House property 
3. Capital Gains
4. Salary
5. Business or profession 
6. Other sources

While filing income tax returns, there are high chances of no mentioning of certain sources of income.  People are under the impression that it is okay to not mention certain sources of income, but it is advisable to recheck that all the sources of the taxpayer’s income are revealed in the form.

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• Not reporting the exempted income

Section 10 of the Income-tax Act provides certain exemptions to the taxpayers. For instance, income earned through agriculture is tax-free. 

Taxpayers should report such sources of income even though no tax is levied.

• Mistake in claiming deductions 

Section 80 C of the Income-tax Act provides for the list of individuals eligible for deduction, the prescribed limit on such deductions.  It clearly states that a deduction of maximum Rs 1.5 lakhs can be claimed upon certain investments.  

While mentioning these deductions, there can be errors on the part of the taxpayer like mentioning the claims under wrong heads, and so on. One should be wary of such details. 

• Not mentioning the interest income on saving account 

This is another common mistake made by a lot of taxpayers at the time of filing income tax returns. 

Section 80TTA of the Income-tax Act provides for allowable and non – allowable deductions. It allows an individual or a Hindu Undivided family to claim deductions on interest income earned through saving accounts and the amount allowed for such deductions is Rs 10, 000 in case the interest income is more than Rs 10,000, and whole interest income is deducted if the amount is less than Rs 10,000. 

While filing income tax returns,  taxpayers should be careful and are required to mention such details in the form.

• Not mentioning the ownership of two or more  properties 

Properties can be self-occupied or vacant. As per the latest amendment in the Income-tax Act, two properties can be self-occupied. 

In case an individual or a business has two or more self-occupied property, it should be clearly mentioned in the income tax returns form.

• Non-payment of Self Assessment Tax

There are certain sources of income where TDS( Tax Deduction at source)^[1] is non-applicable. In such a case, the individual is required to assess the tax himself and pay it in due time. 

Before filing for income tax returns, one should make sure to pay all the self-assessed taxes .

• Non- verification of Income Tax Returns form

As per the prescribed rule, every taxpayer shall verify their ITR either digitally via net banking or One-time password system or they can send the duly signed verification details via post within 120 days of filing the Income-tax returns. 

Consequences of these mistakes

Following are the consequences to be faced by the taxpayer in case of mistakes while filing income tax :

• Upon filing of incorrect details in the form, there is a high chance of such form being rejected or a notice is sent to the taxpayer for correction of such mistakes and rectification within a time period .

• Non-disclosure of all sources of income can attract a penalty, or can be categorized as an Income tax offense.

• Non- verification of ITR filing may invalidate the income tax returns filing.

• If a taxpayer fails to mention the details of self assessment taxes, they will be penalized with 1% of taxes to be paid every month till the next financial year.

• Delay in filing of income tax returns will lead to penalty and can deprive the taxpayer of some privileges available to them otherwise.

Rectification of errors

Section 154 of the Income-tax Act provides a chance for rectification of any mistake that happened while filing Income tax returns.  Provided that such mistakes must be genuine and not done in bad faith. 

The purpose of this section is to give a reasonable opportunity to the taxpayer to correct his/her mistake.

Conclusion – Mistakes While Filing Income Tax Returns

It is quite common for taxpayers to make mistakes while filing income tax returns.  However, it is important for them to re-check everything while they file for ITR, whether filing on their own or even outsourcing such help. Although there are various provisions in the Income Tax Act which give chances to the taxpayers to correct their mistakes, it is better not to make common mistakes while filing income tax. These small mistakes can lead to penalties and other consequences. It is always better to be cautious about important things like income tax returns to keep a good profile.

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