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15 Income Tax mistakes to avoid while filing ITR

Income Tax

A date for filing Income Tax return is nearby. You must be ready with all necessary documents for filing tax return.

ITR filing is an important exercise and as a taxpayer, you have to be cautious while filing income tax returns.  Here is a list of common mistake which taxpayer is likely to make. This year is special when it comes to Income tax. Almost all bank accounts and PAN cards are linked with Aadhaar and rigorous monitoring is taking place as per the Income-tax department. Any mistake related to underreporting of income or inflating deduction/exemptions will lead to heavy penalty including jail. If you want to avoid the unnecessary trouble of income tax here are 15 Income Tax Mistakes you must avoid while filing ITR.

15 Income Tax mistakes to avoid while filing ITR

  1. Fake Bill of HRA

It is observed most of the time that taxpayer produces fake rent receipt or bill to claim HRA. Income tax department has tightened this exemption. This year in ITR form separate section is given asking for tenant PAN number. It is to cross-check both the transactions. So, if you are claiming HRA by paying rent. It is advisable to do such transaction via cheque. It is also recommended to keep lease agreement to avoid further confusion.

Also Read – Save More Tax – Use these less known Income Tax Deductions

  1. Non Reporting of Interest Income on saving account and Fixed Deposit

Taxpayers generally avoid reporting of interest income especially for saving account and fixed deposit. This year as everything is linked with Aadhaar and PAN income tax department get all information about interest income on saving bank account and fixed deposit. It is better to verify all accounts before filing Income tax return.

  1. LTA claim with fake ticket

There are instances where several employees are making fake air travel ticket, boarding passes and IRCTC ticket. This is to avoid tax on LTA. The government has made employer responsible for verifying correctness of the claim. So, one should avoid filing claim by using fake tickets.

  1. False 80 C and other Tax Exemptions

As per section 80 C, you can avail 1.5 Lakh deduction. There are many instances where false 80 C deductions are availed or other tax exemptions are declared but it is not matching with Form 16. You need to provide proof for availing such deduction.

  1. Wrong Information about Charity

Section 80G, 80GGA, 80GGC allows deduction for donation made to specific institutions, NGO and political parties. In order to save tax many people make fake documents of donation. This year donation receipt is also under surveillance. One should avoid giving wrong information about charity.

  1. Not checking Form 26AS before filing return

You should check form 26AS (Your tax credit statement) before filing income tax return. This is to ensure that the TDS deducted on behalf of the taxpayer by deductor is actually deposited with the income tax department and you are filing a return with legitimate information.

  1. Not Reporting All bank accounts

Another important point to remember reporting of all bank accounts. As all accounts are linked with Aadhaar, income tax department has information about all bank account. Failing to mention about account number may create problem for you.

  1. Ignoring Clubbing of Income

You should not avoid income generated by dependent minor. If you have invested in the name of dependent minor, the income generated has to be clubbed with your income.

  1. Not showing Rental Income

There are many landlords who take rent but do not declare it as income. Income tax department has started collecting data about PAN number in rent receipt. They can easily find out rental income details.

  1. Not showing multiple employment

Another common mistake which taxpayer does is not showing multiple employment. This is to save taxes. However, income tax department has information about your transactions. So, avoid doing this type of mistake.

  1. Not declaring par time job/business income

For some people single salary income is not enough they also as freelancer or work part-time and earn money. All these additional money may be a small compared to your primary income. However, you should declare this in your ITR.

  1. Filing 15G/15H without eligibility

There are many instances where people submit Form 15G or Form 15H without eligibility. If your income is crossing taxable limit you are not eligible for filing 15G or 15H. You should be aware about this before submitting Form 15G or 15H.

  1. Not declaring Capital Gains

ITR forms require a taxpayer to furnish information about capital gains. However, many taxpayers avoid providing correct information. One should declare capital gains honestly.

  1. Wrong Claim of Home Loan Interest

Home loan interest paid during construction period is not exempted as per income tax rules. There are many cases of where home loan interest claims are wrongly filed. The taxpayer should avoid such mistakes.

  1. Not Reporting second property as let out property

If you are holding second property it should be declared as let out property in ITR. You also need to consider rent income from second property while calculating annual income.

Over to You –

You should declare your correct income while filing ITR. Income tax department is now equipped with the latest technology like data mining and analytics. If any salaried people or businessman is thinking that they can give wrong information and stay safe, they are wrong. Every transaction done via bank across the country is reported to income tax via Aadhaar and PAN linkage.

Shitanshu Kapadia
Shitanshu Kapadia
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment , tax, financial advice or legal opinion. Please consult a qualified financial planner and do your own due diligence before making any investment decision.