Income Tax Return filing: Filing ITR? Mistakes you need to avoid

Updated: November 02, 2021 1:38 PM

Let us discuss the major mistakes that can be easily avoided while filing income tax returns.

Address such inconsistencies before submission of return to avoid any errors at the time of processing of return.

By Neha Malhotra

Income Tax Return (ITR) is a self-declaration form, in which taxpayers are required to furnish the details of their income and tax payable. Let us discuss the major mistakes that can be easily avoided while filing ITRs.


In a bid to get tough on tax evaders and ease-out the transition to faceless assessment, the ITR forms have been modified to seek additional information from the taxpayers. The ITR forms are now auto-populated with the information already available with the tax department. Incomes like interest, dividend, salary, as reflected in Form 26AS are pre-filled, in addition to details furnished to the employer and reported in Form 16. Bank account linked to the PAN of the taxpayers/ bank account opted for refund is also pre-filled.

While pre-filling accelerates the return filing process, it makes the ITRs prone to errors. It is therefore vital to cross check pre-filled data in the ITR forms and inaccuracies, if any, must be corrected before submission. For instance, careful mapping of each entry in the TDS schedule must be done. It must be ensured that the corresponding income is offered to tax / claimed as exempt under the respective head of income. Also, the option to avail old/ new regime must be selected manually, irrespective of the option submitted to the employer.

While the ITR utility permits editing pre-filled data, any discrepancy in Form 26AS/ Form 16 can only be corrected by the tax deductor. Address such inconsistencies before submission of return to avoid any errors at the time of processing of return.

Income and expenses

The department gathers information regarding the taxpayers’ income from the ITR, which is a self-declaration. This information is matched with the information that it captures from ‘specified persons’, to highlight any incongruities. These ‘specified persons’ are required to report high-value transactions of their account holders. For instance, banks are required to report cash deposits aggregating to Rs 10 lakh or more in a financial year and the registrar is required to report sale/ purchase of an immovable property for Rs 30 lakh or more.

Recently, Form 26AS was revamped to make available all reportable data to the taxpayers. If the taxpayers notice any errors, he may contact the ‘specified reporting persons’ and have the details corrected, to avoid scrutiny assessment on account of mismatch. And in certain cases, they may even file a grievance on the income tax portal.

Incorrect ITR Form

The Central Board of Direct Taxes has notified seven types of ITR Forms. Furnishing the ITR in the wrong form can tantamount to filing a defective/ invalid return. This may entail penalties for non-filing of return or penalties for non-disclosures. For example, a person having salary income in India, may also own foreign assets. If he chooses to declare income in ITR-1, he won’t be able to disclose foreign assets, and may end up facing scrutiny assessment.

For individuals, ITR 1 is supposed to be filed by resident individuals, having income up to `50 lakh, from salary, rent from one house property and other sources. ITR 2 shall have to be filed if a taxpayer has income from capital gains as well, irrespective of the amount. More complicated ITR 3/ ITR 4 shall have to be filed if income includes income from business/ profession or if presumptive taxation is opted for.

With the due date of ITR approaching, individuals must gear up for filing the returns on time. It is essential to ensure true and correct disclosure to avoid any penal consequences.

(The writer is director, Nangia Andersen LLP. Inputs from Vasudha Arora)

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