ITR filing: The due date for income tax return (ITR) filing for the financial year (FY) 2021-22 and assessment year (AY) 2022-23 is 31st July 2022. So, an earning individual would be busy assessing their financials and documents related to them. However, while filing their income tax return, it has been found that an earning individual commit some common mistake that leads to rejection of their ITR, income tax notice or delay in ITR refund.
Speaking on the complexities that a taxpayer needs to understand, Sujit Bangar, Founder at taxbuddy.com said, "Income tax return filing has elusive complexity. We may be thinking that ITR is filed correctly till we get any notice for defective filing of income tax return. Most of these mistakes are due to wrong interpretation of tax provisions or due to ignorance."
Here we list out 5 common mistakes that a taxpayer commit during ITR filing:
1] Not taking credit for tax deduction: Many times we get less refund than expected. Sometimes we get demand notices instead of refund due. And common reason for this is not getting due credit for TDS deducted.
"Most common mistake users do is that they don’t take credit of tax deducted under proper head of income. For example , If I have professionals receipts along with salary and while filing I have clubbed professional income as income from salary, I will get notice from tax department," said Sujit Bangar of taxbuddy.com.
2] Speculative income vs regular business income: Major mistakes users do 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.
"Loss from speculative transactions cannot be set off against business income like F&O or regular trading in shares," Sujit Bangar said.
3] Bank validation: Third most common reason for delay in ITR refunds is issues in 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.
4] Incorrect ITR form selection: Forth common mistake is in selecting 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.
Aarti Raote, Partner at Deloitte India said, "The ITR-1 is a simple tax return that can be filed by a resident tax payer having total income of not more than ₹50 lakhs 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 ₹5000 or has capital gains income."
5] Tax can't be saved beyond form 16: Salaried individuals have major misconception in mind 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.
"We should avoid this mistake. Many things we do in regular course of life and these things have tax saving incidence. For example, tuition fees of kids or RTPCR test (80D deduction of ₹5000)," said Sujit Bangar of Taxbuddy.com.
