It’s easy to think filing your Income Tax Return (ITR) is the finish line, but for more than 2 crore taxpayers, it was just the start of a new problem. Last year, they received notices from the tax department for simple, avoidable mistakes.
3 Common Mistakes That Trigger ITR Notices
Of the 7 crore ITRs filed for the AY 2024-25, over 1.65 lakh were flagged for detailed scrutiny. Many of these aren’t complex tax evasion cases—they’re just regular people who made critical errors. Here are the top three mistakes you need to avoid:
1. Forgetting to E-verify
Filing your ITR is only half the job. You must e-verify it within 30 days. As of August 2024, around 32 lakh taxpayers failed to do this. An unverified return is considered invalid, which can cause any refunds to vanish and lead to penalties of up to ₹5,000.
2. Ignoring Mismatches in Your AIS
The Annual Information Statement (AIS) contains all the financial data the tax department has on you. If the income figures you report in your ITR don’t match your AIS, it can trigger a notice. For example, a dividend of ₹50,000 on your bank statement might appear as ₹55,000 in your AIS because it includes TDS. Even small discrepancies like this can flag your return.
3. Choosing the Wrong ITR Form
Selecting the wrong ITR form can automatically make your return invalid. If you have capital gains or other specific types of income, using a simpler form like ITR-1 will lead to issues. One taxpayer who under-reported 50% of his income by using the wrong form faced a hefty ₹1.46 lakh penalty. Misreporting can even result in penalties of up to 200%.
Remember, an ITR is a legal document. Taking a few extra minutes to ensure accuracy and complete all necessary steps, like e-verification, can save you from a lot of trouble down the line.