Avoiding these 10 common Income Tax Return (ITR) filing mistakes can help you save lakhs!! 💰 A detailed thread 👇 #tax #investing

 1⃣ Missing The Due Date For Filing Returns

File your tax before due date to avoid these penalties 

- A late filing fee of up to Rs. 10,000

- A penal interest rate of 1% per month will be charged on any unpaid taxes

- Delay in receiving a refund on any excess tax paid

- 2⃣ Using The Wrong ITR Form

Using the incorrect form results in a defective filing which will get rejected by the IT Department later.  

The choice of ITR form you need to use depends on your sources of income.

For example, 

- if you are a salaried individual, you can file returns using ITR Form 1.

- But if you are salaried and have income from capital gains from investments, you will need to use ITR Form 2

- If you are self-employed and have income from the profits of a business, you will need to file your returns using ITR Form 3.

- Choosing the correct ITR form might seem difficult. 

But, currently, most websites offering ITR filing services have developed methods to ensure that you can choose the correct ITR form when filing your tax returns.

3⃣ Selecting The Wrong Assessment Year

Many taxpayers get confused between the terms – 

“Assessment Year” and “Financial Year”. 

Financial year: It refers to the time of the year during which the income is earned.

For Example, if you are filing your ITR on or before 30th July 2022, you are filing returns for the income earned between 1st April 2021 and 31st March 2022. i.e. Financial Year 2021-22.

Assessment Year: It refers to the year that follows the financial year. This is the period during which the tax returns are filed. 

For example, if you are filing your tax returns in July 2022, the assessment year is 2022-23.

4⃣ Providing Incorrect Personal Information

In some cases, you might make a mistake when providing critical personal information that is included in your ITR. Examples of such errors are: 

- Incorrect PAN

- Wrong email ID or DOB

- Incorrect bank account number or IFSC code

- 6- If you have given incorrect PAN details in your ITR, your filing will be rejected by the tax authorities. This can result in penalties, penal interest charges, and even a tax audit.

- - Providing your correct email address and mobile number is also important. This is because the IT department often sends out important information through emails and SMS.

6-If you provide incorrect bank account details or IFSC code in your ITR, any tax refunds you are entitled to will be delayed.

5⃣ Not Mentioning Income From All Sources

At the time of filing ITR, make sure you disclose all of your sources of income.

Like your salary, rent from residential or commercial property, interest from FDs, dividends from Equity shares, capital gains, etc.

Individuals are required to report foreign assets in their tax returns. These could be bank accounts, foreign stocks, including ESOPs or overseas trusts. It is necessary to report this carefully with their values.

Additionally, if you have changed jobs during the financial year, make sure you disclose income received from both your current as well as previous employer in your ITR.

Mentioning all of these different incomes along with their sources is mandatory at the time of filing ITR even if such income is exempt from tax.

6⃣ Not Disclosing All Bank Accounts

Many taxpayers have multiple bank accounts but they sometimes forget to mention all the bank accounts in your ITR, which is against Income Tax rules.

Assessees must disclose details of all their domestic and foreign bank accounts.

7⃣ Not Declaring Income Earned By Minor Children

As per current tax rules, any income earned by minor children is clubbed with the parent’s income when computing taxable income. (the income of a minor child is treated the same as income earned by the parent).

Additionally, as per tax laws, if the minor child earns an income from work using special knowledge or talent, then the minor child has to file an ITR separately.

8⃣ Not claiming the benefit of donations, tax-saving investments

Missing to claim the benefit of donations, and tax-saving investments are quite common. 

You cannot make a note of every transaction.

An easy way of tracking this would be to analyze the bank statements in detail where these records would be available.

9⃣ Not Disclosing Capital Gains And Losses

Under current tax rules, it is mandatory for assessees to disclose any/all capital gains or losses at the time of filing ITR.

7So, in case you have not disclosed your capital gains or losses from equities or MFs earlier, it is recommended that you take appropriate corrective measures immediately.

🔟 Omitting Interest Income From Savings A/C

Taxpayers often think that interest earned from savings a/c is exempted from tax.

In reality, if the interest earned from savings accounts exceeds Rs. 10k in a financial year, you are required to pay tax on the excess interest earned