Filing your Income Tax Return (ITR) may seem like a routine annual task, but even small mistakes can lead to hefty penalties and delayed refunds. From choosing the wrong ITR form and missing the filing deadline to failing to report all sources of income, common errors can prove costly for taxpayers. As the ITR filing season progresses, here are seven mistakes you should avoid to ensure a hassle-free filing experience:
Late ITR Filing
One of the widely common mistakes is filing an ITR after the due date. Under Section 234F of the Income Tax Act, taxpayers who fail to file ITR on time have to pay a late fee up to Rs 5,000. In case the total income of the taxpayer does not exceed Rs 5 lakh, the late filing fee reduces to Rs 1,000.
Under-Reporting and Misreporting
Under Section 270A, if a taxpayer under-reports income, they will have to pay a penalty equal to 50 per cent of the tax payable on the under-reported amount. In case the taxpayer is found hiding facts, making false entries, or claiming incorrect deductions, it is treated as misreporting, and in such cases the penalty becomes much higher, up to 200 per cent of the tax payable on the misreported income.
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Late TDS or TCS Filing
A delay in filing TDS or TCS statements can also cause taxpayers to pay Rs 200 per day of default under Section 234F, subject to the amount of TDS or TCS.
No Books of Accounts for Businesses
Businesses and professionals who fail to maintain books of accounts may have to pay a penalty of Rs 25,000 under Section 271A. Additionally, under Section 271B, taxpayers who are required to get their accounts audited but fail to do so may attract a penalty of 0.5 per cent of the turnover or gross receipts, subject to a maximum of Rs 1.5 lakh.
Mismatch with AIS and Form 26AS
Differences between Form 16, AIS, and Form 26AS may result in incorrect reporting and could attract notices from the tax department as well as delay processing.
Filing Revised Income Tax Return
Under Section 234I, if the revised return is filed after nine months but before 12 months from the end of the relevant assessment year, charges of up to Rs 1,000 are applicable to taxpayers whose total income does not exceed Rs 5 lakh. In other cases the applicable fee is Rs 5,000.
Choosing the Wrong ITR Form
Filing returns under an incorrect ITR form may render the return defective and can delay processing. It is recommended to carefully choose the right ITR form before filing returns. Additionally, failing to properly compare the old and new tax regimes before filing can increase the overall tax amount.
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