ITR filing deadline: 8 tips for filing error-free income tax returns at the last minute

ITR filing 2024: Exercise caution while filing tax returns, particularly at the last minute

ITR filing deadline - July 31 - is now almost here. Despite multiple reminders from the income tax department and tax consultants, many tax-payers make the mistake of leaving the unavoidable task of filing income tax returns to the last minute.

There are several risks associated with completing the task at the fag end of the return-filing season. For one, heavy traffic that the official e-filing portal (www.incometax.gov.in) has to handle closer to July 31 can lead to delays. Besides, in a hurry to meet the deadline, you could end up omitting income - which could result in I-T notices later - or missing out on deductions that will lead to higher tax outgo.

This is especially true for taxpayers who have income from multiple sources such as salary, house property, capital gains, foreign income, crypto gains and so on.

Likewise, salaried taxpayers who missed out on selecting old tax framework as their regime of choice in April 2023 while submitting their investment declarations or those who have switched jobs during the financial year need to be more careful while filing returns due to the complexities involved.

Here are eight common mistakes that you must avoid to ensure hassle-free ITR filing, processing and refunds.

Not disclosing foreign assets

Several Indian employees, particularly from the IT sector, are often posted abroad. In such cases, they usually have to open bank accounts in their destination countries. However, many miss declaring these accounts once they come back to India, acquire resident (and ordinarily resident) status and file their ITRs.

Likewise, you have to declare any shares received via stock options from foreign companies, property or pension account that you may have overseas, etc,  in the ITR and Schedule FA (foreign assets). Non-disclosure of foreign assets can attract a penalty of Rs 10 lakh and, in rare cases, even penal action under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. While Budget 2024 has 'de-penalised' non-disclosure of movable foreign assets up to Rs 20 lakh, the obligation to report the same has not been waived off.

Also, if you are claiming benefit under double tax avoidance agreement (DTAA) between India and claim credit on taxes paid in other countries, you need to file Form-67. Not filing this form or incorrect filing could again trigger I-T notices.

Claiming deductions you are not eligible for

Since no documentary proofs need to be attached while submitting I-T returns, some misuse this relaxation to secure tax refunds. As Moneycontrol has pointed out earlier, some taxpayers tend to fraudulently claim deductions under section 80G on donations made to charitable organisations or deductions under section 80U for disabled taxpayers.

However, this could mean inviting I-T notices, as many salaried individuals have learnt over the last one year. Thanks to the use of AI tools and Annual Information Statement (AIS), the I-T department is able to verify the accuracy, or the lack of it, of your (faulty) disclosures.

To avoid landing in the crosshairs of the tax department, it’s best to be honest while filing your returns.

Also read: Ten ITR filing mistakes that you must avoid

Not reconciling Form-16 and Form-26AS data

Before you start filing your returns, you must download Form-26AS and the Annual Information Statement (AIS), which can be accessed through I-T department’s e-filing portal (incometax.gov.in).

The details of tax deducted at source (TDS) and high-value financial and immovable property transactions and so on must match the Form-16 data as well as bank TDS certificates and other financial records. Any mismatch can trigger a notice from the I-T department.

If you discover any discrepancies in these documents, reach out to the tax deductor – for instance, banks, which withhold TDS on the interest earned on fixed deposits, or your employer, who deducts tax from your salary every month – for clarifications and rectifications.

Selecting the wrong ITR form

If you pick the wrong form for filing returns, for instance, ITR-1 when ITR-2 was the form relevant for you, you will be seen as – even if inadvertently – having concealed income and transactions that you ought to have disclosed in ITR-2. For example, say, you netted capital gains through sale of stocks or had a foreign bank account in 2023-24.

If you use ITR-1, you cannot make these disclosures. You could end up with a notice for non-disclosure from the I-T department. Moreover, selecting the wrong form could also render your return ‘defective’.

Not disclosing income from previous employer

If you switched jobs during the financial year, you ought to exercise extra caution. Such salaried taxpayers will have dual Forms-16, issued by their previous and current employers.

You must make sure you disclose the income earned from both organisations and do not ignore short deductions of income tax, if any, by any of your employers. The AIS captures all your income details, so income earned from both employers will get populated.

If your ITR does not contain these details, you could end up with tax notices for failure to declare all incomes.

Relying solely on Form-16 while filing returns

For salaried employees, Form-16 is the key document while filing returns. However, Form-16 does not display many incomes and transactions.

For instance, your savings account balance would earn interest, which is subject to tax (though savings account interest up to Rs 10,000 is allowed as deduction under section 80TTA). Likewise, you will not see capital gains that you may have made on sale of shares or mutual fund units in your Form-16.

Relying only on Form-16 would mean missing out on reporting these incomes and running the risk of inviting a tax notice for non-disclosure. Ensure that you go through AIS as well as your bank statements and capital gain statements issued by mutual fund intermediaries, and broking houses to make accurate disclosures.

Also read: Your comprehensive guide to filing income tax returns for FY 2023-24

Entering wrong bank account details

Pre-validated bank account details ensure that you receive income tax refunds, if any, on time. Any errors in your bank details would mean a delay. Double-check the account number, IFSC, bank name and other details in your ITR form before submitting the returns.

Do not ignore the I-T return verification process

The process of filing ITR does not end with uploading and submitting the returns online. For your return to be processed by the I-T department, you have to verify it within 30 days of filing. You can easily do this online through the I-T e-filing portal using your Aadhaar, pre-validated bank account, demat account and so on. It is best to complete this process along with ITR submission instead of taking the foot off the pedal for 30 days.

If you do not complete the process within 30 days, the date of verification will be treated as the date of filing returns. So if you verify your returns after 30 days and the July 31 due date has passed by, it will be seen as return-filing post the due date, and you might have to shell out late-filing fees of Rs 5,000 (Rs 1,000 if income is less than Rs 5 lakh).