Common Mistakes to Avoid When Filing Taxes in India

Posted In | Finance | Accounting Software | India Accounting Tax

Filing taxes can be a daunting task, especially for those who are new to the process or those who are not familiar with the ever-changing tax laws in India. Many people end up making errors while filing their tax returns due to negligence or lack of understanding. These mistakes can result in penalties, notices from the income tax department, and even delay in refunds. To help you avoid these common errors, we have compiled a list of mistakes to avoid when filing taxes in India.

 

1. Incorrect personal details

One of the most common errors made by taxpayers is providing incorrect personal information. Ensure that you provide accurate details such as your full name, date of birth, gender, address, and Permanent Account Number (PAN). Double-check your information before submitting your income tax return (ITR) to avoid any discrepancies.

 

2. Filing under the wrong tax form

There are different ITR forms available for different types of taxpayers, such as individuals, businesses, and professionals. Filing your tax return using the wrong form can lead to rejection of your return by the tax department. Before you file your taxes, ensure that you choose the correct form based on your income sources and residential status.

 

3. Not declaring all sources of income

It is essential to disclose all sources of income while filing your tax return, including salary, interest income, rental income, capital gains, and income from other businesses or professions. Many taxpayers fail to declare income from fixed deposits, recurring deposits, or capital gains from the sale of property or shares. Any undeclared income can result in penalties and notices from the tax department.

 

4. Not claiming deductions and exemptions

Many taxpayers miss out on claiming deductions and exemptions available under various sections of the Income Tax Act. Make sure you claim deductions for investments made under Section 80C, health insurance premium paid under Section 80D, and interest on home loans under Section 24. Keep a record of all your investments and expenses eligible for deductions to claim them accurately.

 

5. Incorrect calculation of capital gains

Capital gains arising from the sale of property or shares are taxable and need to be reported in your tax return. It is common for taxpayers to make errors while calculating capital gains due to the complex nature of the calculations. Ensure that you consider factors such as indexation, holding period, and exemptions while calculating your capital gains.

 

6. Failing to e-verify your tax return

After submitting your tax return, you need to e-verify it within 120 days of submission. Failing to do so will result in your tax return being considered invalid by the tax department. You can e-verify your tax return through various methods, including Aadhaar OTP, net banking, or by sending a signed ITR-V to the income tax department's Central Processing Unit.

 

7. Filing taxes after the deadline

Filing your tax return after the deadline can result in penalties and interest on the unpaid tax amount. Make sure you file your taxes well before the due date to avoid any penalties and to ensure a timely processing of your return and refund, if any.

 

By avoiding these common mistakes, you can ensure a smooth and hassle-free tax filing experience. It is always advisable to consult a tax expert or use reliable tax filing software to help you file your taxes accurately and on time.