With the Income Tax Return (ITR) deadline looming on July 31, 2024, taxpayers must steer clear of common pitfalls to ensure a smooth filing process. ‘Many salaried individuals file their ITRs themselves, but mistakes can happen,’ warns CA Ashish Niraj, Partner at A S N & Company, Chartered Accountants. Errors in ITR submissions can render returns void, potentially leading to penalties and legal issues. Here are some common mistakes to avoid:
1. Selecting the Wrong ITR Form
Taxpayers must use the correct ITR form to report all income sources. ‘Directors in companies need to file ITR 2, not ITR 1. Those with incomes above ₹50 lakhs must report assets and liabilities, which can only be done in ITR 2 or ITR 3,’ advises CA Niraj.
2. Non-Reporting of FD/Savings Interest or Dividend Income
Interest income from savings accounts, FDs, and other sources must be reported under ‘Income from other sources.’ ‘Missed entries can lead to discrepancies with AIS and 26AS data, prompting notices from the tax department,’ cautions CA Niraj.
3. Non-Reporting of Capital Gains
Taxpayers often overlook capital gains from mutual fund transactions, shares, land, and other assets. ‘All capital gains must be reported,’ stresses CA Niraj.
4. Clubbing of Income
The income of minor children, with few exceptions, should be clubbed with the parents’ income. ‘Many are unaware and file ITRs with their own income only,’ CA Niraj notes.
5. Personal Details Accuracy
Ensure PAN, Aadhaar, email, contact number, and address details are accurate. Incorrect entries can necessitate a revised return.
6. Missing Income from Previous Employers
Job switchers must include Form 16 details from all employers. ‘Omitting details from previous employers can result in a notice,’ explains CA Niraj.
7. Deductions & Proofs
Claim all eligible deductions and provide proper evidence. ‘Missing deductions can be corrected by filing revised returns,’ says CA Niraj. Incorrect or missing proofs can lead to disallowance of deductions.
8. Revenue or Expenditure Details for Businesses
Business owners must reconcile sales and expenses accurately. ‘Reconcile GST data when reporting revenue,’ advises CA Niraj.
9. Correctly Incorporating Income from 26AS
Form 26AS shows TDS deducted and deposited in your name. ‘Reconcile with 26AS to avoid mismatches,’ highlights CA Niraj.
10. Reporting Exempt Income
All income, taxable or exempt, must be reported. ‘Forgetting to include exempt income is a common oversight,’ CA Niraj points out.
Avoid these mistakes to prevent penalties and scrutiny from the income tax department. Even minor errors can cause significant trouble with the IT department. Stay vigilant and file accurately.
