ITR Filing: 5 mistakes that you should avoid while filing income tax returns

Filing Income Tax Returns: Your income tax returns for the financial year April 2020 - March 2021 needs to be filed by the end of this year. As the deadline approaches EJ Biz put together the Dos and also the Do Nots for your tax filings.

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1. Mark the day - December 31

This year, because of the second wave of the Covid pandemic, the deadline for filing returns has been extended to Dec 31 2021. But, if you do not file your Income Tax Returns (ITR) by this due date, you have to incur penalties such as:

• Late filing fee of up to Rs. 10,000
• Penal interest rate of 1% per month will be charged on any unpaid taxes
• Delay in receiving a refund on any excess tax paid

2. Choose the form wisely

The choice of ITR form you need to use depends primarily on your sources of income. For example, if you are a salaried individual, you can file returns using ITR Form 1. But in case you are salaried and have income from capital gains from investments, you will need to use ITR Form 2.

On the other hand, if you are self-employed and have income from the profits of a business, you will need to file your returns using ITR Form 3.

3. Details for refund bank account

As the income tax department in most of the cases remits the income tax refund in the bank account directly, it is important for you to ensure that the bank details opted for credit of the income tax refund are correct.

4. Don't forget to report your side income

Large monetary gifts to lottery luck all such winnings are liable to flat rate of tax at 30% without any basic exemption limit. In such a case the payer of prize money will generally deduct tax at source (i.e., TDS) from the winnings and will pay you only the balance amount.

5. Foreign bank accounts in case you are a resident

In case you have an account in foreign banks, then you need to share the details of the same while filing ITR. Taxpayers need to share the details in the ITR 2 form to share the details.