Ignoring Crucial Tax Documents
One of the most common mistakes is filing your return based solely on Form 16 provided by your employer. While essential, Form 16 only covers your salary income. The Income Tax Department, however, has a far more comprehensive view of your finances through
your Annual Information Statement (AIS) and Form 26AS. These documents consolidate information from various sources, including banks, mutual fund houses, and property registrars. They detail everything from interest earned on savings accounts and fixed deposits to dividend income and property transactions. Failing to reconcile your income with AIS and Form 26AS is a direct path to a tax notice for mismatched information.
Forgetting Other Income Sources
A casual filing habit often involves declaring only salary income. Many taxpayers forget to include earnings from other sources, assuming they are minor or that tax has already been deducted. This is a significant error. You must report all income, including interest from bank deposits (savings and fixed), rental income from a second property, and any earnings from freelance work or side hustles. The AIS will reflect most of these transactions, and any omission in your ITR will be flagged by the department's systems, leading to potential penalties for underreporting income.
Choosing the Wrong ITR Form
Selecting the correct Income Tax Return (ITR) form is a fundamental first step, yet it's a frequent point of error. For many salaried individuals, ITR-1 (Sahaj) is the default choice. However, its use is restricted to residents with a total income up to ₹50 lakh, income from one house property, and no capital gains or business income. If you have sold shares, earned income from more than one house property, or your total income exceeds ₹50 lakh, you likely need to file ITR-2. Filing the wrong form can lead to your return being classified as 'defective', requiring you to refile within a specific timeframe to avoid it being invalidated.
Claiming Deductions Without Proof
While you are not required to submit proof of investments and expenses when filing your ITR, you must have them available. The tax department is increasingly using data analytics to flag questionable deductions. Claiming deductions under sections like 80C, 80D, or for House Rent Allowance (HRA) without possessing the necessary receipts, statements, or certificates is a risky gamble. If your case is picked for scrutiny, you will be asked to produce these documents. Failure to do so can result in the disallowance of the deduction and a demand for additional tax, interest, and penalties.
The Final Step: Forgetting to E-Verify
Filing your return is only half the job done. The process is incomplete until you verify your ITR. If you do not e-verify your return within 30 days of filing, it will be considered invalid, as if it were never filed at all. This means you could be liable for late filing fees even if you submitted the return on time. The e-verification process is simple and can be completed in minutes using methods like an Aadhaar-based OTP, your net banking account, or an Electronic Verification Code (EVC) generated through your bank account or demat account.
