ITR: Filing an Income Tax Return (ITR) is a mandatory duty for every taxpayer. It is an essential process, but after the recent budget changes, the deadline for filing ITR has been extended from July 31st to September 15th, giving taxpayers some relief. However, many first-time filers make mistakes when filing their ITR. Let’s take a look at the common mistakes people make while filing their ITR and how to avoid them.
1. Selecting the Wrong ITR Form
This is one of the most common mistakes. Sometimes, taxpayers select the wrong Income Tax Retirn form while filing. If you do this, your return could be rejected, or the processing might get delayed. For example, if you have earned long-term capital gains from shares or equity mutual funds up to Rs. 1.25 lakh during the financial year, you can now use the ITR-1 form, whereas earlier, you would have needed to use ITR-2 or ITR-3 forms. Always make sure to select the correct form to avoid issues.
2. Not Filing Your Return
Some people think that since their income is low, they don’t need to file an Income Tax Retirn. However, this is not always true. According to the rules, if you have spent more than Rs. 2 lakh on foreign travel, or if your electricity bill exceeds Rs. 1 lakh, you are required to file an ITR. Additionally, if TDS has been deducted and you need a refund, you must file a return. Also, if you want to take advantage of the increased tax exemptions under the new tax regime, filing your return is essential.
3. Ignoring Changes in Tax Rules
Many taxpayers are unaware of the changes introduced in the 2024 Budget. One of the biggest mistakes when filing ITR this year would be ignoring these changes. For instance, the tax on long-term capital gains from listed shares and equity mutual funds will now be 12.5%, and there will be no benefit of indexation. Similarly, the tax on short-term capital gains has been increased from 15% to 20%. Furthermore, when filing Income Tax Retirn, taxpayers must now separately show transactions occurring before and after July 23, 2024, based on the cut-off date.
Additionally, now only the Aadhaar number will be valid in ITR forms 1, 2, 3, and 5. The Aadhaar Enrollment ID will no longer be accepted. Also, the new tax regime is now set as the default, and if you want to select the old tax regime, you must fill out Form 10-IEA before filing the ITR.
4. Not Checking Form 26AS and AIS
Your financial transactions and TDS-related details are available in Form 26AS and AIS (Annual Information Statement). If you don’t check these forms before filing your return, you might end up making mistakes. If there are discrepancies between the details in these forms and your bank statement or Form 16, you should rectify them before filing your return. This will ensure a smooth filing process and prevent delays in receiving a refund or getting a tax notice.
5. Not Reporting All Sources of Income
Sometimes, taxpayers report only income on which TDS is deducted, but that is a mistake. There are various income sources, such as savings account interest, FDs, Rents, foreign income, and freelance income, that may not have TDS deducted. Ignoring these sources and not reporting them in your return can lead to incorrect tax calculations, and you could face penalties later.
6. Not Reporting Exempt Income
You must report exempt income correctly in the Income Tax Retirn. For example, income from PPF interest, agricultural income, LTA (Leave Travel Allowance), HRA (House Rent Allowance), insurance maturity, and Sukanya Samriddhi Scheme returns should be mentioned in the right section. Failing to report this income may make your return defective, and if not corrected in time, it could lead to the return being considered invalid.
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