ITR filing FY 2024-25: First-time income tax filers often make easily avoidable mistakes that can lead to refund delays or scrutiny. Common errors include choosing the wrong ITR form, neglecting to review AIS/TIS and Form 26AS, and failing to report all income sources.
First Time Filing Taxes? Don’t Let These Common Errors Trip You Up
So, you’re diving into the world of income tax returns. Congratulations! It’s a sign you’re taking control of your finances, which is fantastic. But let’s be honest, the process can feel a little daunting, especially the first time around. The good news? Many newbie taxpayers stumble on the same hurdles. Knowing these common pitfalls upfront can save you a lot of stress, potential penalties, and maybe even a headache or two.
This isn’t about scaring you off. It’s about arming you with the knowledge you need to navigate the tax landscape confidently. Let’s jump into some key areas where first-time filers often go wrong and, more importantly, how you can ace them.
Overlooking the Right ITR Form: A Costly Error
Choosing the correct Income Tax Return (ITR) form is ground zero. It’s the foundation of your entire filing process. Mismatching the form to your income sources can lead to your return being rejected. Imagine spending hours filling everything out, only to have it thrown back at you!
The ITR form you need depends on factors like your income sources (salary, business, capital gains, etc.) and your residency status. For example, if you’re a salaried individual with income from house property, ITR-1 is often the form you will use. But if you have income from a business or profession, you’ll likely need ITR-3 or ITR-4. Don’t guess! The Income Tax Department’s website offers a helpful tool to guide you in selecting the correct form based on your specific circumstances.
Misreporting Income: Accuracy is Everything
One of the most crucial aspects of filing your ITR is accurately reporting all sources of income. This includes your salary (obviously), but also things like interest earned on savings accounts, fixed deposits, dividends, and any capital gains from investments. Underreporting income, even unintentionally, can lead to notices from the IT department and potential penalties.
<img src="image-of-a-confused-person-looking-at-tax-forms.jpg" alt="A person looking confused at tax forms, highlighting the complexities of income tax return filing.” />
The key here is meticulous record-keeping. Keep track of all income statements (Form 16 from your employer, interest certificates from banks, etc.) throughout the year. Cross-reference these documents while filling out your ITR to ensure everything aligns.
Missing Out on Deductions: Leaving Money on the Table
Tax deductions are your friend! They reduce your taxable income, which ultimately lowers your tax liability. Many first-time filers simply aren’t aware of all the deductions they’re eligible for.
Common deductions include those under Section 80C (investments in PPF, ELSS, life insurance premiums, etc.), Section 80D (health insurance premiums), and Section 80G (donations to charitable organizations). Explore all available deductions based on your investments and expenses. Remember to keep proper documentation to support your claims. Failing to claim eligible deductions is essentially leaving money on the table – money that rightfully belongs to you! See our other guide on understanding tax deductions for investments.
Ignoring TDS and Form 26AS: The Reconciliation Game
Tax Deducted at Source (TDS) is the tax deducted from your income by the payer (e.g., your employer or bank). Form 26AS is a consolidated tax statement that reflects all TDS, tax collected at source (TCS), and advance tax paid by you. It’s crucial to reconcile the TDS mentioned in your Form 16 and other income statements with the details reflected in Form 26AS.
Discrepancies can arise due to errors in PAN details or reporting by the deductor. If you find any discrepancies, bring them to the attention of the deductor immediately to get them rectified. Failure to reconcile TDS can lead to incorrect tax calculations and potential issues with your return.
Incorrect Bank Details: A Refund Delay Nightmare
Providing accurate bank account details is paramount, especially if you are expecting a tax refund. Errors in your account number, IFSC code, or even the account name can lead to delays or failure in processing your refund.
Double-check and triple-check your bank details before submitting your ITR. Ensure the name on your ITR matches the name on your bank account. A small error here can cause a big headache down the line.
Delaying Filing: Procrastination Pays… Penalties
Filing your ITR on time is non-negotiable. The deadline for filing income tax returns is usually July 31st of each year for individuals. Missing the deadline attracts penalties and interest. Besides the financial burden, late filing can also affect your ability to carry forward losses to future years.
Don’t wait until the last minute to start the process. Gather all the necessary documents well in advance and allocate sufficient time to complete the filing accurately. Filing early also gives you time to rectify any errors before the deadline.
Neglecting Verification: The Final, Crucial Step
Filing your ITR is not complete until you verify it. Verification confirms that you have reviewed and agree with the information provided in the return. You can verify your ITR online through Aadhaar OTP, net banking, or EVC (Electronic Verification Code). You can also verify it offline by sending a signed copy of ITR-V (Acknowledgement Receipt) to the Central Processing Centre (CPC) of the Income Tax Department.
Failure to verify your ITR within the stipulated time (usually 30 days) renders the return invalid. Make sure you complete the verification process promptly after filing your ITR.
