Common Mistakes while Filing ITR | CA Anoop Bhatia

Summary

This video provides a comprehensive guide on common mistakes to avoid while filing your Income Tax Return (ITR) in India. It covers key areas such as claiming incorrect deductions, reporting home loan benefits, reconciling income with Form 26AS, and handling securities transactions and capital gains. The video emphasizes the importance of reviewing documents like bank statements, ensuring correct reporting of interest income, and understanding the provisions of Section 44AD for business owners. It concludes by advising taxpayers to consult with a tax professional to ensure an error-free ITR filing and avoid penalties.

Takeaways

• 😀 Ensure accurate claims for deductions and exemptions, such as under Section 80C and HRA, to avoid discrepancies during assessment.
• 😀 Double-check your home loan benefit claims, ensuring you are using the final certificate for interest and principal deductions.
• 😀 Reconcile your ITR with Form 26AS and Annual Information Statement (AIS) to avoid differences in reported income and tax payments.
• 😀 Consult a tax professional before filing your ITR to ensure all necessary documents are correctly processed and reported.
• 😀 Report all securities transactions, even losses, correctly in your ITR (preferably ITR-2) to carry forward losses or gains properly.
• 😀 Don't ignore unreported interest income from savings accounts and fixed deposits, even if it’s below the ₹10,000 exemption limit.
• 😀 Understand Section 44AD for businesses and consult with a professional to avoid issues with GST and income tax turnover discrepancies.
• 😀 Always review your bank statements for potential taxable income like cash deposits, dividend income, or gifts before filing your ITR.
• 😀 If there’s income to be clubbed from a minor, ensure it is reported accurately in your ITR to avoid penalties.
• 😀 Properly set off long-term and short-term losses to comply with tax laws and avoid misapplications.
• 😀 File Form 10E when claiming relief under Section 89 for salary arrears or benefits from new tax slabs to avoid processing delays.

Q & A

What is the primary responsibility of an assessee when filing their Income Tax Return (ITR)?

The primary responsibility of an assessee when filing their ITR is to provide accurate information about their income and claim the correct deductions and exemptions as per the provisions of the Income Tax Act.

What is a common mistake people make when claiming deductions or exemptions in their ITR?

A common mistake is claiming incorrect deductions or exemptions, such as inflating the amount of donation under Section 80G or claiming HRA exemptions without proper documentation or eligibility.

Why is it important to claim deductions like those under Section 80C and 80G correctly?

Claiming deductions incorrectly can result in the Income Tax Department identifying discrepancies during return processing, potentially leading to penalties, interest, or tax liabilities.

What should an assessee verify before claiming home loan deductions under Sections 24(b) and 80C?

An assessee should verify that the figures used for claiming home loan deductions are accurate, based on the final certificates from the bank rather than provisional ones, and ensure they are eligible to claim deductions for the property they own or co-own.

What does an assessee need to check before filing their ITR with Form 26AS?

An assessee needs to reconcile the figures in their ITR with the income reported in Form 26AS to ensure there are no discrepancies, such as differences in interest income or other reported earnings.

How should losses from securities transactions be reported in the ITR?

Even if an assessee has incurred losses in securities transactions, these must still be reported in the ITR, as they can be carried forward to offset future capital gains, and failure to report may result in an incomplete return.

Is it necessary to report interest income from savings accounts or fixed deposits even if it's below Rs. 10,000?

Yes, it is necessary to report all interest income, even if it's below Rs. 10,000, as the banks report this income to the Income Tax Department and failure to report it can result in issues during the return processing.

What are the risks of incorrectly reporting business income under Section 44AD or 44AE?

Incorrectly reporting business income under Sections 44AD or 44AE can lead to non-compliance with tax laws and may trigger scrutiny, penalties, or audits, especially if the taxpayer is not eligible or fails to adhere to GST requirements.

Why is it important to analyze your bank statements before filing your ITR?

Analyzing your bank statements helps identify any income, such as cash deposits or dividend credits, that must be reported in your ITR, ensuring compliance with tax regulations and avoiding potential issues during assessment.

What should an assessee do if they are claiming relief under Section 89 for salary arrears?

If claiming relief under Section 89 for salary arrears, an assessee must file Form 10E along with their return to ensure the relief is processed correctly and avoid delays in the return assessment.