6 Mistakes to Avoid When Filing Your Tax Returns

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As July 31 of each year comes around, most individual taxpayers in the country have an important task to take care of, i.e. filing their tax returns. Whether you are a salaried person or a self-employed individual, it's likely that you have to file your Income Tax Returns either on your own, through your company, or even through your chartered accountant.

Whatever the case, it is essential to avoid some common but material mistakes when you are filing your Income Tax Return (ITR) for the year. It is particularly important to know what these common errors are if you are new to tax filing because it may take a while to learn the ropes thoroughly.

6 Mistakes to Avoid When Filing Your Tax Returns

Here's a closer look at 6 mistakes you need to steer clear of when you are filing your tax returns for the year.

Mistake #1: Using the wrong ITR form

There are different types of tax return forms that are available on the new income tax e-filing portal. Each type of ITR form may pertain to different taxpayers with different types of income. For instance, if you are a resident and you only have income from salary, one house property, family pension, agricultural income up to ₹5,000, dividends, and interest income, and if your total income does not exceed ₹50 lakh during the year and are not a director, have invested in unlisted equity shares, or in cases where TDS has been deducted u/s 194N, or if income tax is deferred on an ESOP, you should file your taxes in form ITR-1 (Sahaj).

On the other hand, if you are a resident individual, HUF, or partnership (excl. LLP) and have opted for presumptive taxation and have a total income up to ₹50 lakh, and agricultural income up to ₹5,000 and are not a director or have invested in unlisted equity shares, or in cases where TDS has been deducted u/s 194N or if income tax is deferred on an ESOP, you should file your taxes in ITR-4 (Sugam). It is important to choose the right tax return. Not doing so can make your return defective or invalid.

Mistake #2: Providing incorrect personal information

Although it seems like a trivial requirement, it is also crucial to provide the right personal information when you are filing your tax returns. These details include your PAN, Aadhaar information, address, contact information, etc.

Similarly, entering incomplete or incorrect address information or email IDs will interfere with any essential communication from the IT department. So, always check your personal information and contact details before filing your tax returns.

Mistake #3: Providing incomplete or incorrect bank details

Your bank details are also an essential part of your tax returns, and details of all active bank accounts, like your bank name, account number, IFSC, etc., need to be provided. Before you submit and upload your return, you will have to select an active bank account to receive your tax refund, if any. The selection of an active bank account will make it easier for you to receive your refund. However, accidentally providing incorrect bank details for receiving a tax refund is a common mistake among taxpayers.

To avoid this error, verify your banking information and ensure that you enter the details correctly in the income tax return. Also, make sure that the bank account that you mentioned is active, so you can receive the refund due without any hassle.

Mistake #4: Not reconciling your ITR with your Form 26AS, AIS, and TIS

Earlier, many taxpayers got away with filing tax returns without mentioning details of their interest income or various other earnings that were not linked to their PAN. Now, with the prevalence of Form 26AS as well as the introduction of the all-new Annual Information Statement (AIS) and Tax Information Statement (TIS), this kind of omission is kept in check. Various financial authorities and other organisations are now mandated to report various transactions entered by taxpayers along with their PAN to the Income Tax Department. Taxpayers can view such transactions reported on their forms 26AS, AIS, and TIS. If any of the incomes mentioned in your Form 26AS, AIS, or TIS are not included in your tax returns, you will receive an intimation declaring such income or treating your tax return as defective.

You will then have to explain your stance or file a revised return within the specified time limit. In case any tax is due on the omitted income, you will also have to pay penalties and interest due on the same. A simpler workaround to avoid all this trouble is to just reconcile your ITR with your Form 26AS, AIS, and TIS before filing the return.

Mistake #5: Providing incorrect or incomplete information on TDS credit

Form 26AS is a statement where your income on which tax is deducted is reflected, along with details of the tax deductor. It is very important that you capture the correct details of the tax deductor, such as TAN, name of the tax deductor, TDS credit to be claimed or carried forward, details of corresponding income offered to tax under which head of income, etc., while filing your tax return. Providing incorrect or incomplete information will lead to a short credit of TDS and consequently raise tax demand and interest thereon. So taxpayers need to always check Form 26AS and enter the correct and complete details while claiming TDS credit.

Mistake #6: Failing to verify your ITR

It is not enough to just file your tax return on time. You also need to verify the tax return within 30 days from the date of filing the return of income. If you don't do this, your return will be considered invalid. Verifying your return is easy, and you can do this via any of the following options:

With an Aadhaar-based OTP (if your mobile number is linked to your Aadhaar)
Via internet banking
With an Electronic Verification Code (EVC) generated through your bank account
With an Electronic Verification Code (EVC) generated through your demat account
Using your Digital Signature Certificate (if you have one)

Conclusion

Apart from the above, it is very important to provide all the details and information in the relevant schedule of tax returns so that your return is processed swiftly and you do not receive any notice or adverse intimation from the income tax department.

To further steer clear of the mistakes outlined above, it is also crucial to pay all your tax liabilities before you file your income tax returns online. You can now do this online on the e-filing portal with your Kotak Mahindra Internet banking facility, if you are a customer of the Bank. Alternatively, if you are not a Kotak customer, no worries. You can still use our payment gateway to pay your taxes seamlessly and instantly online.

This Article is for informational purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. ("Bank") or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers, and it does not constitute legal advice from the Bank. The Bank, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.

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