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Common Mistakes You Should Avoid While Filing Income Tax Return

3 Mins 21 Dec 2022 0 COMMENT

A duly filed Income Tax Return (ITR) allows tax authorities to assess the net tax liability of an individual, if any, after adjusting for advance tax paid via tax deducted or collected at source. Once the tax obligation is ascertained, the balance money is sent to the individual’s savings account within months of filing the ITR.

However, most people tend to make common mistakes while filing ITRs, which can be easily avoided. If not rectified, such mistakes can invite a notice from the income tax department seeking an explanation for the discrepancy. To avoid such situations, continue reading to learn more about common mistakes taxpayers usually make.

Common Mistakes to Avoid While Filing ITR

So, here are some of the common mistakes to avoid while filing income tax returns, with tips on how to avoid them.

Choosing the wrong ITR Form

This is a common mistake since most people don’t know that there are different types of return forms available for different assesses. Here’s a quick overview of all the types of ITR forms:

  • ITR 1 or Sahaj Form: If you’re an individual taxpayer earning a salary or pension and own a single-house property
  • ITR 2A: If you’re an individual taxpayer of a Hindu Undivided Family (HUF), and you own more than one house property
  • ITR 2: If you’re an individual with multiple sources of income or sources of income outside the country or if you have earned additional money via the sale of an asset or income from other sources
  • ITR 3: If you are a partner in a firm but do not earn any income from the company’s activities
  • ITR 4: If you run any business and earn income from the same
  • ITR 4S: If you’re a HUF or someone who earns income from business and owns a single-house property

There are also ITR 5, ITR 6, and ITR 7 forms for companies. These are the basic criteria; there are other criteria you must look out for while choosing a form.

Not filing your income tax returns after paying tax

Most people think they don’t need to file returns if they have paid taxes. As per the Income Tax Act, if your income is more than Rs 5 lakh and your age is less than 80 years, you must file IT returns. Failure to do this invites penalties, including paying Rs 5,000. It’s even more important to claim tax Deducted at Source (TDS). Failing to do so can attract an income tax notice.

You must file ITR four months after paying taxes, meaning you get enough time to receive Form 16 from your employer and download Form 26AS.

Not reconciling TDS with Form 26AS

Form 26AS is a statement that shows details of the amount deducted as TCS or TDS from various sources of income. It also details income tax refunds and demands related to your PAN. While filing income tax returns, ensure that the TDS details of Form 16 or Form 16A match those of Form 26AS. Or you will not get credit for taxes deducted, which might result in a tax payable situation.

Not reporting exempted income

Most people avoid reporting exempted income since no tax is levied on them. However, as per laws, you must disclose all income; not doing so might make the I-T Department suspicious. An example of exempt income is agricultural income.

Not claiming deductions

You can miss out on tax deductions and exemptions if you are unaware of them. So, it is a good idea to get in touch with a professional chartered accountant from time to time to stay on top of changes in tax laws that may benefit you.

Not disclosing foreign assets

This is one of the most important aspects of ITR – Schedule FA, disclosing foreign assets. Non-residents don’t have to fill this, but residents who’ve invested abroad or acquired assets under the Liberalised Remittance Facility, employees with stock options in foreign companies, or NRIs who have returned to India and have assets abroad are required to disclose this information.

Also, note that this disclosure has to be vis-a-vis the preceding calendar year. If you acquired an asset after December 2021, you don’t have to disclose it in FY 2021–22, but you must do it in the next financial year.

Not adjusting losses from the previous year

You can set off the losses from previous assessment years against the current year’s gains. But you can do this only if you’ve filled out the form before the due date. So, while filing your ITR for the current year, go back to the ITRs of your previous years as well.


Filing ITR is a complex process as it is, so you’re advised not to make it more complex by waiting till the last moment. Waiting for a little longer also decreases the window in which you can go back and revise your ITR, thus reducing the impact of the mistakes you might have inadvertently made.