Filing income tax returns can be a tedious experience for many taxpayers. However, starting the process early and having all the necessary documents can make it easier.
Here are 10 common mistakes to avoid while filing returns for 2023-24 to prevent receiving a notice from the Income Tax Department.
1. Not Verifying Form 16 and Form 26AS Data
Before you start filing your return, ensure you download Form 26AS and the Annual Information Statement (AIS) from the Income Tax e-filing portal.
The financial records in 26AS, such as TDS, must match the details in Form 16. Any discrepancies between the two can lead to problems and a potential notice from the Income Tax Department.
2. Choosing the Wrong ITR Form
Using the incorrect form for filing your return can result in a tax notice. For example, if you have capital gains from the sale of shares or mutual funds but use the ITR-1 form instead of ITR-2, you might receive a notice for non-disclosure. Using the wrong form can cause your return to be declared ‘invalid.’
3. Non-Disclosure of Foreign Assets
Indian employees working abroad often open bank accounts in those countries. Upon returning to India, they may forget to mention these accounts when filing returns.
Even if the balance in these accounts is zero, it’s crucial to disclose them.
4. Not Disclosing Capital Gains Income
AIS and Form 26AS contain comprehensive details of taxpayers’ transactions. Failing to disclose income from the sale of shares or mutual fund units can result in a notice from the tax department.
5. Claiming the Wrong Exemption
Incorrectly claiming exemptions, such as donations to political parties or under Section 80C of the Income Tax Act, can lead to a notice. The Income Tax Department uses technology to detect suspicious exemption claims.
6. Not Preserving Exemption-Related Documents
If you file returns under the old regime, keep all documents that justify your tax exemptions. This precaution can protect you during any investigation and prevent potential problems.
7. Not Providing Information About Previous Employer’s Income
If you’ve worked for multiple companies in a financial year, you should seek professional help when filing returns.
Ensure you mention income from all employers, as the AIS will reflect the details of both Form 16s provided by your current and former employers.
8. Providing Incorrect Bank Account Details
Refunds are credited to the bank account number you provide. Incorrect bank account details can delay your refund.
Be meticulous in entering your account number, IFSC, bank name, and other details in the ITR.
9. Filing Returns at the Last Minute
Last-minute filing can lead to mistakes, such as missing important details. The closer it gets to the deadline, the more traffic the Income Tax Department’s website experiences, which can cause technical issues. Filing early can help you avoid these hassles.
10. Not Completing the E-Verification Process
Filing the return is only part of the process; verification is also necessary. Without verification, the Income Tax Department will not process your return.
You can verify your return using your Aadhaar number, bank account, demat account, or by sending the ITR-V form to the Central Processing Center in Bengaluru.
The return is considered filed only after the verification is completed within 30 days.
By avoiding these common mistakes, you can ensure a smoother and hassle-free experience while filing your income tax return for 2023-24.
