Know About ITR Filing Challenges for Taxpayers

ITR Filing Challenges for Taxpayers

Every taxpayer is required to file an accurate Income Tax Return (ITR) so that the correct amount of data can be collected by the Income Tax Department and contributed to the government revenue.

The process of filing an accurate ITR is not that simple and demands the presence of mind & adherence to the norms & guideline set by the Tax Department. Any errors or faults occurred out of negligence may result in the imposition of hefty fines or penalties on the taxpayer.

Here Is a List of Common Challenges an Assessee’s Face While Filing an ITR:

Challenge#1 Selection of a Correct ITR:

Among the availability of seven different ITR from, choosing the correct one based on the nature and source of income is one of the challenges faced by the taxpayer as each form has its clause. In general, ITR-1 is relevant for the salaried individuals whose main source of income is salary, however, there are some eligibility conditions which makes e-filing ITR-1 for fy 2018-19 irrelevant for a salaried individual.

So, selecting a correct ITR form is one of the challenges for taxpayers.

Challenge#2 Calculating an Exact Amount of Deduction:

Section 80C of the Income Tax Act gives the right to claim deductions up to 1.5 Lakhs from income to a taxpayer in a particular fiscal year. But due to lack of awareness & expertise, many taxpayers are unable to claim their deductions from income.

Deductions can be claimed by showcasing expenses such as a child’s tuition fees or investments in financial institutions. Like any contribution made by an individual up to 1.5 Lakhs in the National Pension System (NPS) can be claimed as deductions u/s 80CCD (1). Along with this an additional contribution of Rs. 50,000 can also be made in NPS and deduction can be availed on it u/s 80CCD (1B). So, a sum of Rs. 2 lakhs can be claimed as deductions under two different sections.

In the same way, an amount paid in an insurance policy can also be claimed u/s 80D. There are many other deductions available u/s 80 that a taxpayer may not know.

Lack of knowledge about claiming different deductions is another challenge a taxpayer’s faces.

Challenge#3 Calculating Correct Taxable Income:

A taxpayer needs to furnish income from each source in ITR. Different sources of income can be rent, interests, draft, agriculture profit, short and long term gains and so on. A taxpayer has to mention the taxable income from different sources, for which he has to calculate his taxable income accurately.

Computation of taxable income from different sources is one of the challenges faced by the Taxpayer.

Challenge#4 Stating an Accurate Tax Deducted at Source (TDS):

While stating an accurate TDS you must ensure the same is furnished in Form 26A and Form 16 or 16A. If the amount of TDS mentioned does not match with the amount furnished in Form 26A, then the ITR filed will be erroneous.

Note: TDS is deductible not only from the salary but also from the fixed deposits.

Challenge#4 Failure to Claim HRA Tax Relief:

House Rent Allowance (HRA) can be claimed with the help of various sources available online. Exemptions available on HRA should be calculated properly so that exemptions can be claimed out of your income.

A taxpayer needs to submit the required documents to the HR dept. to avail the HRA tax relief.

For example: If you are accommodating in a rented home and paying an annual rent of more than 1 Lakh then you become eligible to claim HRA tax relief. But for that, you will need to submit rent agreement, rent receipts and PAN of the house owner to the HR department of your company.

Challenge#5 When an Employee Fails to Submit Tax Evidence to the Employer:

A taxpayer must ensure that he/she has duly and timely submitted his/her tax declaration along with all the necessary documents to his/her employer. All the tax proofs, a taxpayer needs to submit are mentioned in Form 16s, which can be claimed during e-filing.

If you fail to submit tax evidence to your employer on time, you may get restricted from claiming exemptions or tax benefits from your salary income.

Challenge#6 More than One 16s Form

This challenge is encountered by the employee who switches his workplace or company in a particular fiscal year. In such a case, an employer needs Form 16s from the current employer as well as from the previous employer. Holding more than 16s form, sometimes becomes challenging for the taxpayer.

Challenge#7 Failure in Paying Advance Taxes on Time

When the tax liability of a taxpayer is more than Rs. 10,000 in a fiscal year, then they are required to pay advance taxes for that particular fiscal year. Advance taxes can be leviable to the businessman, salaried individual or a freelancer; depending on some conditions.

Advance taxes have to be paid by the assessees in quarterly instalments:

  • 15% on 15 June or before (subtract advance tax paid already)
  • 45% on 15 September or before (subtract advance tax paid already)
  • 75% on 15 December or before (subtract advance tax paid already)
  • The penalty is levied when you fail or get late in paying advance taxes.
  • The penalty is levied when you fail or get late in paying advance taxes.

Challenge#8 Not Remembering the Login Credentials

A taxpayer may forget the login ID and password and there are higher chances of that because the account is used once in a year. Password recovery is a time-taking task. Moreover, if the taxpayer is utterly dependent on his CA for filing ITR but now that CA is not catering his services to that taxpayer then this becomes a challenge for a taxpayer. So, a taxpayer must keep the password and other login credentials secure & safe with him.

Challenge#9 Last-minute ITR Filing

ITR filing isn’t a last-minute job as it demands complete attention and awareness. If you leave this task for last moments, there are higher possibilities that you will file an incorrect ITR which will lead to its rejection by the income tax dept. and unfortunately, you will have to refile a correct ITR. The penalty will be imposed on you for delayed filing of income tax return via Gen IT Software.


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