ITR Filing: 5 Common Mistakes That a Taxpayer Should Avoid
The due date for income tax return (ITR) filing for the financial year 2021-22 is July 31, 2022. As the deadline is approaching, taxpayers are busy assessing their financials and documents related to them.
However, while filing ITR, many people commit common mistakes that lead to rejection of ITR, income tax notice or delay in refund.
Most of us think that ITR is filed correctly till we get a notice of incorrect filing of income tax return. Most of these mistakes are due to wrong interpretation of tax provisions or due to ignorance. Here are five common mistakes taxpayers commit while filing ITR:
Not taking credit for tax deduction:
Many times taxpayers get less refund than expected. Sometimes they get demand notices instead of refund and the most common reason for this is not getting due credit for TDS deducted under proper head of income.
Speculative income vs regular business income:
Major mistakes taxpayers commit is in respect of set off of loss from speculative transactions like day trading transactions. Sometimes we have loss from speculative income and profit from regular share trading or F&O trading.
Bank validation issue:
The third most common reason for delay in ITR refunds is issues related to bank account validation. One should ensure PAN and AADHAR are linked. It helps in bank validation for faster refunds and in e-verification for quick processing.
Wrong ITR form selection:
Fourth common mistake is selecting wrong ITR form. If one has more than one house property, one cannot file ITR-1, for example. Therefore, correct ITR form needs to be ascertained and filed.
The ITR-1 is a simple tax return that can be filed by a resident taxpayer having total income of not more than Rs 50 lakh and has income reported from sources like salary, income from other sources and only one house property. One needs to note that the return cannot be used by a director of a company or has tax deferral for ESOP of startups or an individual having agricultural income more than Rs 5,000 or has capital gains income.
Tax can’t be saved beyond form 16:
Salaried individuals are wrongly under the impression that tax can’t be saved beyond form 16. They file ITR by relying on tax computation of form 16 without giving fresh look at tax deductions.