Income Tax department to refund excess interest paid for 2020-21

The Indian Income Tax Department on Wednesday said it will refund the excess interest and late fee paid by taxpayers due to software error while filing ITR for 2020-21. During the COVID-19 pandemic, the last date for filing the Income Tax Return (ITR) for the last financial year was extended till September 30, 2021, from July 31. 

However, taxpayers raised a complaint saying that interest and late fees were charged while filing (ITR) after July 31, 2021.

In a tweet, the IT department said the ITR software was rectified on August 1 to remove the error due to incorrect computation of interest under section 234A and late fee under section 234F of the Income Tax Act.

“Taxpayers have been advised to use the latest version of the ITR preparation software or file online. If, by any chance, someone has already submitted the ITR with such incorrect interest or late fee, the same will be correctly calculated while processing at CPC-ITR and the excess amount paid, if any, will be refunded in the normal course,” the I-T department tweeted.

After realising the errors/ bugs, the Income Tax Department released a new version of such e-filing utility, removing the error/ bug.

Mistakes to avoid while filing Income Tax return

Choose forms carefully

ITR forms are based on different sources or a combination of incomes. ITR-1 (SAHAJ) is for resident individuals having income up to Rs 50 lakh. ITR-3 is for those whose income generates from a business.

ITR-4 (SUGAM) is for freelancers. If you manage to file the wrong form, you might receive a notice from the income tax department.

Reporting income sources

When you fill the ITR form, make sure to mention all sources of income. If you fail to mention this, it may result in a discrepancy that will be reflected in the TDS certificate (Form 16) and Form 26AS.

Failure to declare income from capital gains

It is very important to provide details of your capital assets, purchase and expenses to calculate the capital gain while filing ITR.

Minor’s income

If any investments are made in the taxpayer’s child’s name, they should be mentioned while filing.

Declare bank accounts

While filing the ITR, it is mandatory for the customer to declare all their active bank accounts. They have the option to choose the bank account in which they want to get their income tax refund credited.