We know how tedious it gets during tax filing months. We need to get all our documents in place, verify all the details, tally information with the Income Tax Department, and then file our returns well before the due date.
In this rush, we often make mistakes that can later cost us a lot.
So, based on our experience of filing taxes over the past few years, I’ve listed the most common mistakes people make and why you should avoid them.
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Not verifying your income and taxes with AIS and Form 26AS
Both these statements are available on the e-Filing Portal, and due to a lack of awareness, people forget to check the details here.
Form 26AS contains the details of all the taxes you have paid, including TDS/TCS, advance taxes, and self-assessment taxes. If you forget to tally this, you might miss out on a refund of your hard-earned money.
Moreover, AIS maps all your major transactions, such as purchasing any movable or immovable property, receiving dividends, or interest from your savings account. Therefore, you should always verify the details here. If the income reported by you in your ITR does not match those mentioned in the AIS, you may receive a mismatch notice.
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Selecting the wrong ITR Form
You need to choose the right ITR form based on your sources of income. Often, individuals get confused and select the wrong form, missing out on reporting some of their incomes. Here’s a thread you can refer to if you’re finding it difficult to choose the correct form.
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Forgetting to disclose your interest from savings account and FDs
See interest income of up to ₹10,000 from savings account and FDs is exempt from taxes, but that does not mean you don’t have to report this income in the ITR.
Further, most FDs credit interest on maturity, and you may not receive the interest every year. But even in that case, the bank is supposed to deduct TDS on the accrued interest, and hence you should not wait until maturity to report your interest income in the ITR.
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Not pre-validating your bank account
If you are entitled to receive an income tax refund, your bank account needs to be pre-validated on the income tax portal. Also make sure that your PAN is linked to your bank account, or else it won’t be validated.
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Not reporting foreign holdings and unlisted shares
In most cases, you are required to report earnings only when you sell assets. However, if you own any foreign assets, such as an overseas bank account, foreign stocks, ESOPs in foreign companies, etc., you need to report them in the ITR under Schedule FA (foreign assets) even if you haven’t sold them. Similarly, unlisted shares need to be reported as well.
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Not comparing tax liabilities under both regimes
Even after the new regime has become the default, you can still choose the regime that is optimal for you. If you have made any tax-saving investments or paying home loan EMIs, you may still benefit from the old regime. Therefore, it is important to compare the tax liability under both regimes to avoid paying more taxes.
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Forgetting to e-verify the ITR
E-filing your ITR is not enough; you also need to e-verify it within 30 days. If you fail to do so, your return is invalidated, and you might end up paying a penalty if you file again after the due date. It takes hardly 2 minutes to e-verify via OTP, so don’t miss out on it.
These are just some of the many mistakes you should avoid while filing your ITR. There are more, so it’s crucial to double-check all your details, report all your incomes and deductions accurately under the correct heads, and keep more of your hard-earned money where it belongs – in your pocket.
Lastly, don’t shy away from seeking professional help, especially if you are filing taxes for the first time.