Published by: Vivek Dubey
Filing income tax returns (ITR) is an important and mandatory obligation for taxpayers in India. However, there are some common mistakes that taxpayers should avoid while filing their ITR to ensure accuracy and compliance.
With the income tax (I-T) department enabling the online ITR-1, ITR-2 and ITR-4 forms with pre-filled data for the assessment year 2023-24, here are some of the mistakes and how to avoid them:
Different ITR forms are applicable for different types of taxpayers and income sources. Choosing a wrong form can make the return defective and require re-filing.
The assessment year should match the financial year for which the return is filed. Quoting a wrong year can lead to double taxation and penalties.
Form 26AS shows the summary of TDS and tax payments on the income. It should be verified with the TDS certificates before filing the return.
All bank accounts in India except dormant ones should be declared in the return. The refund, if any, will be credited to the chosen bank account.
All sources of income, including from previous or current employment or investments, should be considered while computing the ITR. Failing to do so can result in a tax demand notice from the tax department.
The details of sale, purchase and expenses of capital assets should be given in the ITR. The investments made to claim capital gains exemption should also be reported.
Interest income from various investments such as fixed deposits, savings account, post office schemes, bonds etc. should be reported in the ITR. Some interest income is eligible for tax deduction up to a certain limit.
The income from investments made in the name of a minor child should be clubbed with the parent’s income. A deduction of up to Rs 1,500 per child up to two children can be claimed.
The ITR forms have specific formats for entering various details such as personal information, income, deductions, taxes etc. Entering incorrect details can cause errors and rejection of the return.
If an employee has more than one Form 16, he/she should consolidate all the incomes and calculate the tax liability accordingly. Filing returns inaccurately can result in underpayment or overpayment of taxes.