Filing Your Income Tax Return? 5 Common Pitfalls to Avoid

Filing your Income Tax Return (ITR) is a crucial annual financial responsibility. However, the process can be complex, and even minor errors can lead to notices from the tax department, delayed refunds, or missed opportunities. To ensure a smooth and accurate filing experience, be mindful of these five common mistakes.

1. Selecting the Incorrect ITR Form

One of the most frequent errors is choosing the wrong ITR form. The Income Tax Department provides several forms (ITR-1, ITR-2, ITR-3, etc.), each designed for specific types of income and taxpayers.

1. The Pitfall: A salaried individual with income from house property might automatically select ITR-1 (Sahaj), not realizing that certain conditions, like foreign assets or high-value transactions, mandate a different form.
2. How to Avoid: Carefully review the eligibility criteria for each ITR form on the Income Tax e-filing portal. When in doubt, consult a tax professional or use the form selection guide provided online.

2. Neglecting to Reconcile TDS with Form 26AS/AIS

Your Form 26AS and Annual Information Statement (AIS) are definitive records of the taxes deducted on your behalf by employers, banks, and other entities.

1. The Pitfall: Simply entering the TDS amount from your Form 16 without cross-verifying it with Form 26AS can lead to discrepancies. There might be missing TDS credits from other sources like interest income or freelance payments.
2. How to Avoid: Download your Form 26AS and AIS from the e-filing portal before you start filing. Ensure the total TDS claimed in your return matches the consolidated figure in these statements to prevent processing delays.

3. Overlooking Income from Other Sources

Many taxpayers focus on their salary but forget to report income from other avenues, assuming TDS covers the liability.

1. The Pitfall: Failing to declare interest earned from savings accounts, fixed deposits, recurring deposits, or even lottery winnings is a common oversight. The tax department receives this information independently through the AIS.
2. How to Avoid: Gather all your bank statements and investment summaries for the financial year. Even if the interest is minimal or tax has been deducted, it must be disclosed under the appropriate head ("Income from Other Sources").

4. Misclaiming Deductions under Chapter VI-A (Sections 80C, 80D, etc.)

While maximizing deductions is wise, claiming them without valid proof or exceeding the permissible limits is a red flag.

1. The Pitfall: Claiming the full ₹1.5 lakh deduction under Section 80C without having the corresponding investments or proof of payment (e.g., life insurance premiums, ELSS, EPF contributions). Similarly, overstating medical insurance premiums under Section 80D is a common error.
2. How to Avoid: Maintain organized records of all investment proofs, premium receipts, and donation certificates. Only claim deductions for which you have supporting documents readily available for submission if required.

5. Ignoring the Verification Step (ITR-V)

Filing the return online is only half the process. For it to be considered valid, it must be verified.

1. The Pitfall: Many taxpayers complete the e-filing procedure but forget to e-verify their return using an Aadhaar OTP, Net Banking, or other methods. An unverified return is treated as never having been filed.
2. How to Avoid: E-verify your return immediately after filing. It is the simplest and fastest method. If you choose to send a physical ITR-V, ensure it is signed and posted to the Centralized Processing Centre (CPC) in Bengaluru within the stipulated 30-day timeframe.

Final Checklist for a Hassle-Free Filing:

1. Choose the correct ITR form.
2. Reconcile all income with Form 26AS/AIS.
3. Report all sources of income, no matter how small.
4. Claim only eligible deductions with valid documentation.
5. E-verify your return immediately after submission.

By being meticulous and avoiding these common missteps, you can ensure your ITR is filed accurately and on time, keeping you compliant and stress-free.