ITR filing: 4 common mistakes to avoid getting Income Tax dept's notice

Union Finance Minister Nirmala Sitharaman shared that the Income Tax department has sent around 100,000 notices to people who did not report their income accurately or did not file their returns.

According to Business Today, these notices were sent to individuals with incomes close to Rs 50 lakh.

These notices are related to tax returns filed 4 to 6 years ago and were issued in the last 14 months.

The Central Board of Direct Taxes (CBDT) has reviewed 55,000 of these notices as per a Supreme Court decision.

If you are currently in the process of filing your Income Tax Return (ITR) and have missed the July 31st deadline, note that the late fee is Rs 1000.

To prevent this in the future, there are four common mistakes you should be aware of:

Choosing the Wrong ITR Form: Many salaried individuals mistakenly believe that they only need to file ITR-1.

However, it is essential to consider specific conditions before selecting the correct ITR form. For example, if you receive a salary and also have capital gains from mutual funds and stocks, you might need to file ITR-2. 

Consult a financial advisor to ensure you choose the right form; otherwise, your filing may be invalidated or cancelled.

Underreporting Income: Underreporting your income can lead to substantial penalties, so it is crucial to avoid this mistake.

Remember to report income from all sources, not just your salary. This includes income from fixed deposits, savings accounts, and other sources of interest income.

Failing to Verify Your ITR Form: After filling out your ITR, do not forget to verify it. Failing to do so means that your ITR filing will not be considered complete.

Missing the Deadline: Ensure you file your ITR before the deadline. Failing to do so can result in penalties.

By being mindful of these common mistakes, you can improve your tax filing process and avoid potential issues with the tax authorities.