The CBDT has again extended the timeline to file FY
2020-21 income tax returns (ITRs) to December 31, 2021, from the
earlier extended timeline of September 30, 2021, for individual taxpayers and assessees other than those whose accounts are liable for audit.
To ensure correctness and completeness, returns have to be
filed diligently. Any inconsistency or gaps in reporting can invite
queries or tax notices from the income-tax department.
The process of filing returns is done entirely online.
Further, due to the requirement of additional details and also the change in
processes in the new income-tax portal, there is a possibility that an
individual may make mistakes. The process may also take longer than usual.
In view of the above, below are some of the common mistakes
that individuals should avoid while filing their ITR.
Using correct ITR Form
While filing the ITR, the
taxpayer should use the correct ITR form. In case a taxpayer uses the wrong
form for filing ITR, the tax department may serve a notice of defective return
under section 139(9) of the Act to the taxpayer. In this regard, instructions
on the Form issued by the tax department should be referred to determine the
correct form applicable based on the Residency
, type of income, number of house
For example, any person whose taxable income does not exceed
Rs 50,00,000 (Rupees fifty lakhs) can use Form ITR-1 provided he does not
have any income under the head “Capital gains" and “Profits and gains of
business or profession". You cannot use Form ITR 1 if you are a director
in a company, have unlisted shares, or even own more than one house or
have agricultural income over Rs 5,000.
Mentioning correct basic details
ensure that correct PAN
, Aadhaar and TAN
numbers are filed and that the
residential status is correctly determined and mentioned. They should also
verify all the details filed in the ITR Form before the final submission of the tax
Mention correct communication details
must mention correct and current communication details such as email id,
address, mobile number etc. As the tax department has switched to faceless
assessments, all communication will be sent to the email id mentioned in the
Report all sources of income
Based on his
residential status, a taxpayer must report income from all sources, including interest
income from fixed deposits (FDs), capital gains arising from the sale of mutual
, including equity shares or any other asset. From FY 2020-21, dividend
income is taxable, and accordingly, taxes need to be paid thereon. Resident and
Ordinarily resident individuals should mandatorily report all foreign assets
and income, including overseas pension, ESOPs, foreign bank accounts, etc., and
any benefits claimed under the Double Taxation Avoidance Agreements.
Reconciliation of income in Form 26AS
should ensure that the income as per Form 26AS matches with the income reported
in ITR, and any mismatch will result in a tax query from the department. The taxpayer
should ensure that the tax paid details reflected in Form 26AS are correctly
mentioned in Form ITR for the correct processing of returns.
Reporting income from the previous employer
If you have
changed jobs during FY 2020-21, then income from the previous employer must be
reported along with income from the current employer. Further, one should ensure
that the standard deduction is restricted to a maximum of Rs 50,000.
In case of tax refund arising in ITR, a taxpayer should ensure
that active and accurate bank account details (i.e. account number, IFSC code,
name of the bank etc.) are mentioned to ensure quicker receipt of refund to
taxpayer’s bank account.
The ITR filing process gets completed
only on e-verification
of the ITR filed. There are various options available to
e-verify tax returns, i.e. using Aadhaar OTP, Net banking, Demat account, bank ATM, or simply sending the signed physical copy of Form
ITR-V to CPC Bangalore. The taxpayer must ensure that PAN and Aadhaar are
linked (the link date is currently extended to March 31, 2022). The Indian mobile number is active to ensure smooth e-verification of returns
filed. Once the e-verification is complete, tax authorities consider the return
to have been filed.
If one discovers any error after filing the tax return,
then filing a revised Income tax return within a prescribed
timeline is the option.