8 common mistakes people make while filing income tax returns

Filing income tax returns can be a tedious job, especially since the norms have tightened over the years. As the July 31 deadline approaches, we take you through a few common mistakes that taxpayers should avoid while filing their returns:

Choosing the wrong ITR form

The first thing one should note is that you have to choose the accurate form before you proceed to file ITR. There are multiple forms -- Sahaj (ITR1) , Form ITR-2, Form ITR-3, Form Sugam -ITR-4, Form ITR-5, Form ITR-6, Form ITR-7, and Form ITR-V -- available for filing income tax based on whether you are a salaried individual or have a business. For the salaried class, it is ITR 1. Filing tax using the wrong form will lead to rejection and probably a notice.  

Reporting or writing down your correct net income is one of the most important things in this process. Under-reporting or non-reporting of income could snowball into one of the biggest ITR offences and can land you in trouble with the tax authorities. Individuals should also ensure that they mention all interest generated from a savings account. Non-compliance with this guideline could mean trouble too.

The basic rule of filing income tax returns is to mention your source of income. Wrong information on this can attract heavy penalties. To be on the safer side, you should also include incomes that are not taxable. Furnishing all information is the safest way to comply with the norms.
It should be noted that as laws get stricter, missing out on details while filing returns will be seen as an act of tax evasion and you may even receive an I-T notice on the same.

Many a times people ignore the fact that interest income, incomes from a savings account, fixed deposits and other investments, are also taxable. Interest income from fixed deposits is not tax-free and the amount earned as interest on fixed deposit is also taxable.
Besides, in savings bank accounts the tax exemption is only up to Rs 10,000. After which your savings are taxable. Under-reporting of these sources can also lead to penalties and rejection of your form. While filing your income tax return, you must mention this income, under the head 'Income from Other Sources'.

It should be noted that there is a penalty of up to Rs 5,000 if you fail to file the returns on time, the initial deadline of July 31, applicable from this year. If you miss the December 31 deadline, your fine will be doubled to roughly Rs 10,000.
Late filing will also debar them from receiving interest paid on tax refunds.

While mentioning the details in your form, one should note that the details should be same everywhere. Even a small error in details can lead to the issuance of an I-T notice. You must ensure that details provided such as postal address, email address, PAN number is correct or the filing may be rejected by the department.

You are required to disclose all your bank accounts in your income tax return against the earlier practice of giving only one bank account in which refund has to be credited. You can exclude only dormant accounts in ITR.

The process of filing ITR is not over until you submit ITR-V, which is an acknowledgement that you get after e-filing the return. You can either e-verify it, or send a signed copy to the Income Tax Department by normal post within 120 days of filing your return.