Filing income tax returns (ITR) correctly is crucial for compliance, yet many taxpayers make avoidable errors. These mistakes can lead to penalties, delayed refunds, or even legal troubles. Understanding these common pitfalls is essential for every taxpayer. What are these errors, and how can you avoid them? Let’s break it down.
Incorrect or Incomplete Form 26AS Verification:
Form 26AS shows the details of tax deducted at source (TDS) and tax paid by the taxpayer. Many make the error of not verifying this form before filing their returns. Errors in Form 26AS, such as missing TDS entries or incorrect PAN details, can cause mismatches and tax notices.
How to Avoid: Cross-check Form 26AS on the Income Tax Department website well before filing your return. If discrepancies exist, contact the deductor or employer promptly to correct the mistakes. For example, verify ₹10,000 TDS on interest with bank records.
Underreporting or Overreporting Income:
Whether intentionally or accidentally, underreporting income is a common income tax mistake in India. Taxpayers sometimes omit freelance income, interest earned from fixed deposits, or rental income. Conversely, overreporting income can also cause problems by inflating your tax liability unnecessarily.
How to Avoid: Maintain a detailed record of all your earnings throughout the year. Use Form 26AS to cross-verify income reported by banks or employers. Also, consult the official Income Tax India portal regularly to stay updated on taxable income categories.
Incorrect Deduction Claims:
Missing Deduction Claims:
Many taxpayers miss out on claiming deductions because they are unaware of the full range available under Indian tax laws. Apart from common sections like 80C, there are others such as 80CCD for National Pension Scheme (NPS) or 24(b) for home loan interest. Ignoring these reduces your potential tax savings.
How to Avoid: Make sure to stay updated with current limits and invest wisely in instruments like Public Provident Fund (PPF), National Savings Certificate (NSC), or ELSS funds. Moreover, plan investments according to your tax bracket and financial goals.
Incorrectly Filling Tax Return Forms:
Filing the wrong income tax form or making errors while entering data such as – such as wrong PAN, mismatched bank details, or incorrect bank account numbers – is another frequent income tax mistake. Different forms apply based on income source and taxpayer category. Using an incorrect form can delay refunds or trigger audits.
How to Avoid: Always verify which ITR form suits you – ITR-1 for salaried individuals, ITR-4 for business owners with presumptive income, etc. Use digital tools available on the e-filing portal, which help in auto-filling data and highlight errors. Moreover, validate your ITR using Aadhaar OTP or net banking to avoid complications.
Missing ITR Filing Deadlines:
The last, but often most damaging, mistake is missing the tax filing deadline. The due date for individual taxpayers is usually July 31 each year. Filing late attracts penalties starting at ₹5,000 and can rise up to ₹10,000. Additionally, delayed filing may affect your ability to carry forward losses or claim refunds timely.
How to Avoid: Mark the ITR deadline (September 15, 2025, for FY 2024-25) and use the ITR offline utility or e-filing portal early. File ITR-U within two years to correct errors, per Section 139(8A).
Conclusion:
In conclusion, avoiding common income tax mistakes in India can seem challenging but is entirely manageable with awareness and discipline. By keeping your documents ready, reporting all income, verifying Form 26AS, respecting deduction limits, and filing on time you can ease your tax journey. Ready to file accurately? Explore more tax insights now!
– Ketaki Dandekar (Team Arthology)
Read more about Common Income Tax Mistakes here – https://cleartax.in/return-filing-mistakes