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Tax filing: What happens if you use wrong ITR form

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While filing an income tax return (ITR), taxpayers are required to choose the correct form. Choosing the wrong form may only complicate the process for the taxpayer.

Tax filing: What happens if you use wrong ITR form
While filing an income tax return (ITR), taxpayers are required to choose the correct form. Choosing the wrong form may cause untoward complications in the process for taxpayers.
As is commonly known, Income Tax Department has notified seven forms for filing ITR for financial year FY20-21 or assessment year FY21-22. These forms include Sahaj (ITR-1), Form ITR-2, Form ITR-3, Form Sugam (ITR-4), Form ITR-5, Form ITR-6, and Form ITR-7. The purpose of different forms is that each form is for different kinds of disclosure depending upon the amount or nature of incomes, assets and liabilities or foreign assets held by a person, availing of presumptive scheme, etc.
In case the taxpayer file the income tax return in the wrong form- which means ITR form which is not applicable to him/her, Gopal Bohra, Partner, NA Shah Associates tells that the tax officer may consider such return as defective under the provision of section 139(9) of the Income Tax (I-T) Act.
“In that case, the tax office may intimate about the defect and the taxpayer will require to remove the defect within 15 days of such notice by filing a revised return with the correct ITR form,” he said.
Now, if the taxpayer fails to remove the defect within 15 days, the ITR return will be treated as invalid. Consequently, the person may face penalties for non-filing of ITR in addition to payment of interest under Section 234A for the delay in filing the tax return.
In exceptional cases, it is possible that the return filed in the wrong form would be treated as valid as the return may be structurally fine.
“However, the person may still face penalties for wrong disclosures e.g. if a person having salary income has used ITR-1. The person may be having foreign assets which can’t be disclosed in this form. In such a case, the person may face penal action for non-reporting of foreign assets,” said Sandeep Sehgal, Director- Tax and Regulatory, Ashok Maheshwary & Associates LLP.
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