Beware of These Mistakes
Concealing Income Sources: Failure to declare all income sources in your ITR, such as interest from savings accounts or FDs, rental income, dividends from the stock market, capital gains, crypto profits, or foreign income, is considered a serious offence. The Income Tax Department’s AI-powered system meticulously cross-checks your documents with the AIS (Annual Information Statement) and Form 26AS. Any discrepancies detected may result in a notice. Choosing the Wrong ITR Form: Taxpayers often choose the wrong ITR form based on their income type. For example, ITR-1 or ITR-2 might be suitable for salaried individuals, but ITR-3 is necessary for business or capital gains income. Selecting the incorrect form can invalidate the return.
Claiming Fake Deductions or Allowances: Many individuals make false claims for deductions such as medical expenses, HRA, or donations to reduce their tax liability. The Income Tax Department recently detected ₹1,600 crore in fraudulent deductions. Such cases can lead to penalties ranging from 50% to 200% and imprisonment up to 7 years.
Bank Details Errors: Incorrect bank details in the ITR, such as an incorrect IFSC code or account number, can cause delays in refunds or trigger notices. Ensure your bank account is pre-validated. Not Performing E-Verification: E-verification within 30 days of filing the ITR is mandatory. Failure to do so can invalidate the return and attract a penalty of up to ₹5,000 under Section 234F.
Spending Excess Refund: If you mistakenly receive an excess tax refund, inform the Income Tax Department before spending it. Failure to return the excess amount may result in legal action.
Income Tax Department’s Stricter Enforcement
The Income Tax Department has further strengthened its AI-powered system this year, which cross-checks AIS, Form 26AS, TDS, GST, and bank data. Recently, the department gave over 40,000 taxpayers an opportunity to correct errors via SMS and email, leading to the recovery of ₹1,045 crore in fraudulent deductions.How to File the ITR Correctly
- Check Form 26AS and AIS: Reconcile your income and TDS details with Form 26AS and AIS.
- Declare All Income Sources: Include even small amounts of income, such as interest or dividends.
- Keep Documents Ready: Maintain proper documentation for any claimed deductions or allowances.
- Seek CA’s Assistance: Consult a Chartered Accountant for complex income sources.
- File on Time: The deadline for ITR filing is 15 September 2025. Avoid delays.
