ITR Mistakes: A Simple Mistake Could Cost You 200% Penalty
The Income Tax Return (ITR) season is here, and many taxpayers across the country are getting ready to file their Returns. Whether you are a salaried employee, a freelancer, or a business owner, it is important to report your earnings to the government by the deadline. Filing your ITR helps you claim refunds, avoid penalties, and maintain a clean financial record. You can also claim various deductions under the old tax regime.
However, did you know that one small mistake while filling out your tax return can be a very costly mistake for you? Many people do not realise how easy it is to miss a step or enter the wrong details. Financial experts are also reminding people to be extra careful while filing their Income Tax Returns. Even small mistakes can lead to heavy penalties, delayed refunds, or a notice from the tax department. So, it is important to double-check everything before you submit your return. But what is the common mistake taxpayers often make? Let us understand some common mistakes so that you do not repeat them.
Table of Content
Not Verifying Form 26AS and AIS
Many taxpayer do not verify their Form 26AS and the Annual Information Statement (AIS) before filing returns. This may result in delays in getting refunds or paying more. If you are a salaried person, make sure you have your Form 16 and any documents related to home loans, capital gains, or dividends ready before you start filing.
Picking Wrong ITR
Choosing the wrong ITR form is one of the most common mistakes people make during ITR filing. If you choose the wrong ITR file, it will be marked as “defective“, and you will get just 15 days to fix it. If you do not correct it, your return might be rejected. Every ITR form is designed for a specific type of income, so it is important to pick the right one. For example, salaried individuals earning up to Rs 50 lakh should file ITR-1 (Sahaj), while those who have capital gains, own more than one property, or hold foreign assets should go with ITR-2. If you run a business or are a professional, ITR-3 is the correct choice. People using the presumptive income scheme need to file ITR-4 (Sugam).
In case you are uncertain about which ITR to pick, it is best to consult a tax expert so that you do not face any difficulties while filing ITR.
Not Doing E-Verification
After filing your tax return, there is an important step, you must verify the filed ITR within 30 days. You can do this quickly online using Aadhaar OTP, net banking, or your Demat account. If not, sign and mail the ITR-V form to the tax office in Bengaluru. Without verification, your return will not be accepted.
Other Common Mistakes
If you do not file your ITR on time and file it late, you could be penalised Rs 5,000 if your income is above Rs 5 lakh. If your income is below Rs 5 lakh, a Rs 1,000 penalty will be imposed. Giving wrong information might cost you a penalty of 50% of the tax you owe, and if the mistake is intentional, the penalty can go up to 200%. Businesses that do not keep proper records or submit audit reports on time may have to pay fines as high as Rs 1.5 lakh.
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