Incorrect Income Tax filing may lead to heavy penalties; All you need to know

Even small errors in income tax filing can lead to penalties and delays in refunds. Choosing the correct form and having necessary documents ready are crucial.

Caution is essential

Filing income tax returns is an unavoidable duty for most. Small mistakes can lead to penalties and delays in refunds. Choosing the right form from the start is crucial. Even selecting the wrong form can result in penalties, according to financial experts.

Types of Forms

File using the appropriate form. Using the wrong one can be considered a Defective Return.

• ITR-1 (Sahaj) – For those with a single salary income up to ₹50 lakhs.
• ITR-2 – For those with investments in stocks, property, or overseas assets.
• ITR-3 – For those earning income from business or profession.
• ITR-4 – For those filing based on presumptive income (Sugam).
• ITR-5, 6, 7 – For partnerships, corporate entities, and trusts.

Old and New Tax Regimes

The new tax regime is beneficial with fewer deductions. The old regime is better with more deductions. Salaried individuals can switch anytime. Business owners can switch only once in a lifetime.

Important Documents Required

1. Verify 26AS statement and Annual Information Statement (AIS).
2. Salaried individuals should have Form 16.
3. Proof of home loan interest, capital gains, etc., should be ready.
4. Bank account, dividend income details should be recorded.

E-Verification is Mandatory

E-verify within 30 days of filing via Aadhaar, bank, or Demat account. Otherwise, the filing is invalid. Alternatively, print, sign, and mail ITR-V to Bengaluru.

Key Points to Remember

• Choose the correct form.
• Keep all supporting documents ready.
• Verify 26AS and AIS.
• Don't skip e-verification.
• Carefully consider old vs. new tax regimes.

Every mistake leads to a penalty

Incorrect filing leads to penalties and refund delays. Exercise extreme caution.

Late Filing:

• Income > Rs 5 lakhs: Rs 5,000 penalty.
• Income < Rs 5 lakhs: Rs 1,000 penalty.

Late Tax Payment:

• Annual interest on tax due.
• 1% monthly interest under Sec. 234A, 234B, 234C.

Incorrect Information (Income, Deduction, Bank details):

• 50% penalty on tax (for miscalculation).
• 100%-200% penalty (for intentional errors).

Wrong Form Selection:

• Considered a Defective Return.
• Income Tax Department issues notice.
• Filing becomes invalid if not corrected within 15 days.

Filing without verifying TDS Details:

• Refund delays.
• Excess tax deduction.
• Need to file revised return.

Filing without maintaining Books of Accounts (for businesses/professionals):

1. ₹25,000 penalty for no Books of Accounts.
2. Additional Rs 1 lakh penalty for avoiding audit without Books.

Late Audit Report Filing:

• Up to Rs 1.5 lakh penalty.
• 0.5% of income for the delay period (lesser amount).

Important Reminder:

Mistakes lead to losses and scrutiny from the Income Tax Department. Late filing and errors can cause loss of tax benefits. Refund delays, interest, and penalties can create significant problems.

Best Practices:

• Choose the correct form.
• Verify 26AS and AIS.
• File before the deadline.
• Don't forget e-verification.
• Keep necessary documents ready.