7 Common Errors To Avoid While Filing Taxes

By Ektha Surana

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Updated on: May 10th, 2024

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6 min read

Filing your tax return can be one of the most stressful tasks on your daily agenda this year. Moreover, waiting until the very last minute causes additional worry that you can avoid. The deadlines are approaching and if you haven't already prepared your paperwork, now is the time. However, while doing so, always remember the commonly made mistakes as they can get you in big trouble.

It’s easy to become lost in the Income Tax’s vast ocean of provisions, sections, deductions and rules. Therefore, we have compiled a list of some of the most common errors which the majority of taxpayers should avoid. 

What Are the Common Mistakes People Make While Filing Tax Returns?

Here is a list of some of the common mistakes that you can avoid while filing Income Tax Returns:

  1. Mentioning Incorrect Personal or Corresponding Details

You should always give special attention at the time of mentioning your Aadhaar, PAN, address, and other contact details. It is because the Income Tax Department will send the notices to the given address provided in the most recent ITR. If you do not provide the correct address, the ex-party orders and notices will get sent to the wrong address. 

Furthermore, ITR-V will be sent to your email id and a reminder text will be sent to the mobile number given in the ITR. Therefore, it is essential to provide accurate information to avoid further confusion down the line.

  1. Incorrect Filing Of Tax Forms

It is necessary to use the appropriate ITR form to report all your taxable and tax-exempt income sources. Filing the wrong tax form can lead to errors and penalties. For instance, if you are a salaried individual with a gross income below Rs 50 lakh and with no capital gains income, then you should use ITR 1 file to report your income sources. Alternatively, if you are an individual earning income from a profession or business, the appropriate form for you would be ITR-3.

If you select the incorrect ITR form, the return may be deemed defective or invalid entirely. As a result, selecting the appropriate ITR form is crucial before submitting the form.

  1. Not Checking Form 26AS Statement

Form 26AS provides insight into your income, tax deducted at source or TDS, self-assessed tax paid, advance tax paid, and more. Prior to submitting the ITR, it is essential to cross-verify the information with the employer's Form 16 and Form 26AS. It is your responsibility for ensuring that all information on Form 26AS is accurate and up-to-date. In the event of any confusion, the Income Tax department might send a notice and it might lead to less refund or more tax payable. 

  1. Failure To Report Income From Other Sources

According to Section 56 of the Income Tax (IT) Act, 1961, 'Income from other sources' signifies earnings that do not fall under any other income heads. Due to a lack of awareness many of us fail to mention our income from secondary sources under the appropriate head in the tax returns. 

Example: If the annual income from your savings account is less than Rs.10,000, it is not taxable. Now let’s say that you have received an interest income of Rs.5000. 

Accordingly, the interest received needs to be first mentioned in the head 'Income from other sources' and afterwards, you can claim the deduction under Section 80TTA if you are below 60 years of age. 

  1. Not Mentioning Exempted Income

It is another frequent error that most taxpayers make. According to Income Tax laws, taxpayers need to report all their income, regardless of whether they get excluded from taxation. The law mandates every taxpayer to file Income Tax returns if his/her income exceeds Rs 2.5 lakh or if they meet certain conditions and their total income is less than Rs 2.5 lakh. 

For instance, suppose you sell your house and invest the earnings to buy another; in this case, the capital gain is exempt from taxation under Section 54 of the Income Tax Act, 1961. However, you should disclose this transaction appropriately in the tax document.

  1. Incomplete and Inaccurate Bank Details

Filing inaccurate bank details is a typical error. Due to incorrect information in terms of name, IFSC code, bank account number, etc., the IT department fails to process a significant number of refunds every year. As all refunds from the IT department are sent directly to your bank account, it is imperative to provide accurate bank information.

Additionally, it is important to keep in mind to pre-validate your bank account in order for the tax department to be able to process your refund.

  1. Failure To e-Verify ITR V

The obligation to file a tax return does not end with submitting the ITR itself. It is necessary to verify the return within 30 days of filing as without it, the IT department will not process your tax return. If you fail to do so, the department will send you a notice stating that it is ‘invalid’. 

Additionally, if you fail to respond to the notice within the stipulated time frame, it will be considered that you have never filed a return by the IT department. As a result, all non-filing fees and penalties will be applicable in such a scenario.

Final Word

You should file your income tax return with utmost care as you could end up getting penalised or even receive a tax notice in case of any errors. Keeping accurate records, claiming only eligible deductions, reporting all sources of income and other aspects ensure that you only pay what you owe in taxes and help you to adhere to the law regulations. 

About the Author

Multitasking between pouring myself coffees and poring over the ever-changing tax laws. Here, I've authored 100+ blogs on income tax and simplified complex income tax topics like the intimidating crypto tax rules, old vs new tax regime debate, changes in debt funds taxation, budget analysis and more. Some combinations I like- tax and content, finance & startups, technology & psychology, fitness & neuroscience. Read more

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Quick Summary

Filing tax returns is stressful but crucial. Common mistakes include incorrect personal data, using wrong tax forms, not checking Form 26AS, not reporting all income sources, missing out on exempted income, providing incorrect bank details, and failing to e-Verify ITR-V. Accuracy is key to avoid penalties and comply with regulations.

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