Common Tax Filing Mistakes That Could Cost You a Fortune

Every year, around the months of July and August, you may find there is a buzz around your family members and colleagues as they may be preparing to file their ITR (Income Tax Returns). As a salaried employee or a business owner, you too must file your taxes on time; it is one of the important obligations you must fulfill as a responsible citizen. 

During the tax-filing period, you may need to gather various important documents, including Form 16, interest certificates, capital gains statements, Form 26AS, and others. However, in the rush to obtain these documents, you may overlook certain smaller details and commit common tax-filing mistakes that can derail the entire process of filing your returns. Sometimes, these mistakes can cost you a fortune. 

Fortunately, most mistakes can be avoided and easily corrected. In this guide, we discuss some of the common mistakes that people make while filing income tax returns and how you can avoid them. 

 

Mistake 1 – Missing the due date for filing ITR 

As per the government rules, for individuals, whether you are a self-employed professional or salaried employee, the due for filing an ITR is July 31 of the assessment year. So, it is paramount that you do your due diligence and get all the documents needed for tax filing well in advance to avoid last-minute hassle. More importantly, it is better to file the taxes before the due date. 

And if you fail to do so, you may face several issues, including:

• A late tax filing fee of up to Rs. 10,000
• A penal interest rate of up to 1% per month on unpaid taxes
• You may also face a delay in receiving the refund of the excess taxes you may have paid

 

Mistake 2 – Not filing the tax returns

While missing the due date of filing the tax returns is bad, missing the tax filing altogether can be worse and have severe consequences; the IT department will take legal action against you. This may include:

• Penal interest on the taxes due to be paid as calculated from the due date till the filing of the ITR
• A minimum penalty of 50% of the avoided tax payable, apart from the applicable tax dues
• Imprisonment for a period of 3 to 7 years

 

Mistake 3 – Providing incorrect personal information 

One of the most common mistakes people make when filing income tax returns is providing incorrect personal information on the return form. Some common examples of such errors include incorrect PAN (Permanent Account Number) details, incorrect date of birth or email address, and incorrect bank account details. 

These mistakes may seem harmless, but they can cause a lot of issues for you. 

• For example, if you have provided incorrect PAN details, the IT department will reject your filing and even impose a penalty, charge a penal interest charge and even initiate a full tax audit. 
• Similarly, if you provide incorrect bank account details, you may face delays in receiving the tax refunds that you are entitled to get. 

 

Mistake 3 – Not disclosing all bank account

Many individuals who have multiple bank accounts don’t mention all their bank account details in their ITR. This is a big tax-filing mistake that you must avoid. Not disclosing all your bank details, be it domestic or foreign bank account details, is a breach of IT rules, and if found guilty, you may face heavy penalties and even charges for money laundering. 

 

Mistake 4 – Mentioning the wrong assessment year

While filing your Income Tax Returns, you must be careful about each and every detail you mention in the form, including the mention of the assessment year for which you are filing the returns. 

For the financial year 2024-25, the correct corresponding annual year would be 2025-26. If you mention the annual year incorrectly, you may have severe consequences like double taxation. Also, it may attract unnecessary penalties and cost you a fortune. 

 

Mistake 5 – Ignoring notices and communication from the IT department

If you receive any notice from the income tax department, you must respond to it promptly. And if you fail to do this, you may face legal action, a penalty, or both. 

As soon as you receive any notice, take the necessary corrective action. For example, if there are any discrepancies in the ITR form and proof you submit, make sure to provide the same or pay the additional tax as needed. 

 

Conclusion

Just like many people commit several mistakes while filing ITR and face severe consequences, they also make the mistake of not choosing the right lender while availing a home loan and regret their decision by paying a higher interest and feeling stuck with the same lender for many years. 

But you can be smart and avoid the above common tax filing mistakes and also be a prudent borrower. You must always avail yourself of a home loan from reputed financial institutions like India Shelter. You can borrow any amount from Rs. 5 Lakh to Rs. 50 Lakh at the most attractive interest rate, which ensures that the EMI is affordable. 

Also, you get flexible repaying terms to align your financial condition. Furthermore, the simple online application and quick approval process ensure that you have a hassle-free borrowing experience.