 "ITR, Tax, income tax, income tax returns")
The last date to file your income tax return (ITR) for FY 2022-23 (AY 2023-24) is getting near on July 31, 2023. While most individual taxpayers file their tax returns on their own, understanding the complex laws of income tax can prove to be a deterrent in filing the return.
Depending on the income of the taxpayers, the income tax (I-T) department provides seven different types of forms ranging from ITR form 1-7. Basis on the applicability, the taxpayers are required to fill out these forms before the due date to avoid any penalty.
It is important to note that one should complete their ITR filing process by taking some time to avoid mistakes, which usually occur when an individual is filing them either at the last minute or in haste.
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"Mistakes made while filing can invalidate your income tax return and expose you to penalties and prosecution", a LiveMint report said citing an expert.
Here is a list of common mistakes that taxpayers can avoid while filing ITR:
Selecting the incorrect ITR form
Selecting the incorrect ITR form is one of the most common mistakes while filing ITR. Taxpayers must note that choosing an incorrect form can lead to a defective filing that will be rejected by the Income Tax Department.
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The correct ITR form is selected on the basis of the source of income, total taxable income, the origin of the income, assets, and so on.
ITR forms 1-4 can be used by individual taxpayers to file their returns. ITR 1 is applicable for salaried professionals, who have a total income of Rs 50 lakh in FY23. It is worth noting that the same form can also be used by those who earn income from other sources, like interest from fixed deposits (FDs).
Interest income
Another common mistake and one of the crucial ones is to not declare income from all the sources. Including income from salary, business/profession, house property, capital gains, and investments is crucial, if one does not wish to invite penalties.
Failure to pre-validate your bank account
Before filing your ITR, it is crucial to ensure that your bank account is pre-validated, especially if the taxpayers are expecting a tax refund.
Choosing the wrong assessment year
Another common mistake is getting confused while choosing the assessment year. Many taxpayers often confuse the terms financial year and assessment year. A financial year is the period during which a taxpayer earns income. Assessment year, on the other hand, is the year following the financial year, when the returns are filed.
Not verifying your ITR
Not verifying or forgetting to verify your ITR is yet another common mistake. This error is usually realised after a notice from the Income Tax department is received.
