How DIY Filing Misses Key Deductions and Refunds
- PRITI SIRDESHMUKH
- Sep 2
- 9 min read
Filing your Income Tax Return (ITR) on your own may seem like an appealing option to save time and money. However, DIY tax filing often leads to missed deductions, underreporting, and potential delays in receiving refunds. While online platforms and government utilities have simplified the process, taxpayers are still at risk of overlooking deductions, resulting in missed opportunities to reduce their taxable income. Let us explore how DIY filing can lead to missed deductions and refunds, the importance of keeping detailed records, and how a platform like TaxBuddy can help ensure that you maximize your deductions and avoid common mistakes. Additionally, we’ll discuss updates for FY 2025-26 and provide guidance on what to do if you miss out on a deduction.
Table of Contents
How DIY Filing Leads to Missed Deductions and Refunds
When you file your ITR on your own, especially without professional assistance, there is a high risk of overlooking valuable deductions. These deductions, if missed, result in higher taxable income, which directly affects the amount of tax payable. Often, taxpayers forget to claim exemptions they are eligible for, or they may not fully understand the intricacies of available deductions such as those under Section 80C, 80D, or other specific tax-saving provisions.
For instance, under the old tax regime, taxpayers can claim deductions for investments in Provident Fund (PF), National Savings Certificate (NSC), life insurance premiums, and home loan repayments, but DIY filers might fail to account for these correctly. This could lead to paying more taxes than necessary, as the full benefits of these deductions are not realized.
Common Deductions Missed by DIY Filers
Certain deductions are frequently overlooked by individuals who attempt to file their returns on their own. These deductions could significantly reduce your taxable income and lead to a larger refund, but without the right knowledge, they are often missed. Some of the most common deductions missed include:
Section 80C: This section offers tax deductions on investments up to ₹1.5 lakh in instruments like Public Provident Fund (PPF), National Savings Certificate (NSC), and life insurance premiums.DIY filers often forget to include the total amount of eligible contributions.
Section 80D: Deductions for premiums paid for health insurance policies are often missed. Many taxpayers overlook the fact that premiums paid for themselves, their family, and their parents are eligible for deduction under this section.
Section 80E: Interest paid on education loans is deductible under this section. However, many DIY filers fail to account for this expense or forget to report it entirely.
House Rent Allowance (HRA): Often, individuals forget to claim exemptions under HRA, especially if they don't maintain proper rent receipts or if their employer hasn't deducted the appropriate amount of tax at source.
Section 24(b): Deduction on home loan interest (up to ₹2 lakh) is commonly missed, particularly if the filer hasn't kept track of their loan details.
Section 10(14): This section provides deductions for transport allowances and other employment-related expenses, which many DIY filers overlook.
Importance of Documentation and Record-Keeping
One of the critical factors in ensuring you don’t miss deductions is maintaining proper documentation and records. Keeping track of all your expenses, investments, and receipts can help you maximize your tax savings and avoid missing out on valuable deductions. For instance, if you have paid premiums for health insurance under Section 80D or invested in PPF under Section 80C, you need to have clear evidence of these transactions.
Maintaining organized records, such as receipts, bank statements, and proof of investments, ensures that you can confidently file your return and claim the right deductions. Without proper documentation, it's easy to forget small yet impactful deductions, leaving money on the table.
The Risk of Incorrect Deductions and Refund Delays
When filing your ITR on your own, there’s a significant risk of claiming incorrect deductions. Taxpayers may mistakenly calculate the amount of deduction, incorrectly categorize an investment or expense, or miss out on claiming deductions altogether. Incorrect deductions can trigger a tax audit, lead to penalties, and delay the refund processing.
Filing an inaccurate return may also result in a mismatch between the information provided in your ITR and the data available with the Income Tax Department, leading to delays in your refund. The delay in receiving refunds due to errors in deductions can be frustrating, especially if the refund amount is substantial.
How TaxBuddy Can Help Maximize Your Deductions
TaxBuddy is a powerful tool that helps maximize your deductions by ensuring that no opportunity is missed. Whether you’re filing independently or opting for expert-assisted filing, TaxBuddy’s AI-driven platform scans through your financial data and identifies all available tax-saving options. It not only helps you claim deductions under common sections like80C and 80Dbut also ensures that you don’t miss out on more complex deductions related to home loans, education loans, or business expenses.
With TaxBuddy, you can upload your financial documents, and the platform will automatically suggest the most optimized tax-saving strategies based on your profile. The platform’s expert assistance option also provides personalized support, helping you identify all eligible deductions and ensuring your return is error-free. By taking advantage of TaxBuddy’s services, you ensure that you claim every deduction you’re entitled to, ultimately reducing your taxable income and maximizing your refund.
Updates for FY 2025-26: Changes in Tax Rules
For the upcoming financial year (FY 2025-26), the Income Tax Department has announced several key changes to the tax regime that may affect how deductions and exemptions are claimed. One of the major updates is the introduction of revised tax slabs under both the new and old tax regimes.
Under the new tax regime, some deductions and exemptions, such as the standard deduction and additional deductions for certain investments, will continue to be available. However, the old tax regime, which allows for deductions like those under Section 80C and 80D, will still be available for taxpayers who choose to opt for it.
It’s essential for taxpayers to stay updated on these changes and understand how they impact their tax planning and filings. Platforms like TaxBuddy will provide updated tax calculators and guidelines to help taxpayers navigate these changes and ensure they’re making the most of available deductions.
What to Do If You Missed a Deduction
If you discover that you’ve missed a deduction after filing your ITR, don’t worry; there’s a way to correct it. You can file a revised return before the end of the assessment year, which will allow you to claim the missed deduction and adjust your taxable income accordingly. If the missed deduction results in a higher refund, the Income Tax Department will process the refund based on the revised return.
However, it’s important to act quickly, as revisions must be done within the assessment year, and the sooner you make the correction, the faster you’ll receive your refund.
For those who are unsure of how to file a revised return or are worried about missing out on deductions, TaxBuddy offers expert assistance to help you make the necessary changes seamlessly.
Conclusion
Filing your ITR accurately is crucial to minimising your tax liability and maximising your refund. While DIY filing may seem like a cost-effective solution, it often leads to missed deductions and delays in refunds. Proper documentation, attention to detail, and understanding tax-saving opportunities are key to ensuring you don’t leave money on the table. TaxBuddy simplifies this process by guiding you through the filing and deduction process, offering personalised advice and ensuring you claim every deduction you’re entitled to. For those who need expert assistance or want to optimize their filing experience, TaxBuddy is a reliable solution. For anyone looking for assistance in tax filing, it is highly recommended to download theTaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1: Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? Yes, TaxBuddy provides both self-filing and expert-assisted plans for ITR filing. The self-filing plan is ideal for individuals who are comfortable navigating the tax filing process independently. It allows you to file your return at your own pace, with access to helpful tools and guidance from TaxBuddy. On the other hand, the expert-assisted plan is tailored for those who prefer professional assistance. A qualified tax expert guides you through the entire filing process, ensuring accuracy and maximizing deductions. This plan is especially beneficial for individuals with complex tax situations, such as business owners or those with multiple sources of income.
Q2: Which is the best site to file ITR? The best site to file your ITR depends on your preferences and filing needs. TaxBuddy is a highly recommended option for those looking for a seamless, user-friendly filing experience. The platform simplifies the filing process by offering both self-filing and expert-assisted options. TaxBuddy ensures that you maximize deductions and credits, file accurately, and comply with the latest tax regulations. Unlike the official Income Tax Department portal, which can be difficult to navigate, TaxBuddy offers a more intuitive platform, guiding you step-by-step through the process.
Q3: Where to file an income tax return? You can file your ITR directly on the official Income Tax Department portal (incometax.gov.in). However, many taxpayers prefer using platforms like TaxBuddy for a simplified filing experience. TaxBuddy provides a more streamlined process, ensuring accurate returns while offering expert assistance for those who need it. Whether you are filing a simple return or have a more complex tax situation, TaxBuddy provides tools and support to maximise your deductions and minimize errors.
Q4: Can I file my ITR after the deadline without penalties? No, if you file your ITR after the deadline, you will face penalties and interest charges. The penalty for filing late can be up to ₹5,000 under Section 234F of the Income Tax Act, depending on the delay. Additionally, interest will be levied on any unpaid taxes under Sections 234A, 234B, and 234C. However, if you miss the deadline, you can still file a belated return within the same assessment year, but you will incur these penalties and face delayed refund processing.
Q5: What happens if I fail to file ITR within the extended deadline? If you fail to file your ITR by the extended deadline of September 15, 2025, you can still file a belated return by December 31, 2025, for FY 2024-25 (Assessment Year 2025-26). However, you will incur a penalty of up to ₹5,000 depending on the delay, and interest will be charged on any outstanding taxes. Additionally, your refund processing will be delayed compared to those who filed on time. It's important to file as soon as possible to minimize these issues.
Q6: How do I check the status of my income tax refund? You can track your income tax refund status by visiting the official Income Tax Department portal and logging in with your PAN and the relevant assessment year details. The status will be updated as the Department processes your return. Alternatively, if you filed through TaxBuddy, you can also track your refund status directly within the platform, or TaxBuddy's support team can assist you in checking the status of your refund.
Q7: Does TaxBuddy assist with TDS credit verification? Yes, TaxBuddy helps with TDS credit verification as part of its ITR filing service. The platform ensures that your TDS credits are correctly reflected in your tax return, minimizing the chances of discrepancies or delays in your refund. If there are any issues with TDS credits, TaxBuddy will guide you in resolving them, ensuring that your return is accurate and complete before submission.
Q8: How long does it take for TaxBuddy to process an ITR filing? The time it takes for TaxBuddy to process an ITR filing depends on the complexity of the return. For simple returns, it can often be completed within a few hours. However, if you choose the expert-assisted plan, the process may take longer depending on the level of assistance required and the complexity of your tax situation. TaxBuddy aims to ensure that all returns are filed efficiently and accurately, so the timeline may vary based on your specific needs.
Q9: What if I file ITR after the extended deadline? If you file your ITR after the extended deadline of September 15, 2025, you can still file a belated return by December 31, 2025. However, you will incur penalties, and your refund processing will be delayed. The penalty for filing late can be up to ₹5,000, and interest will be charged on any unpaid taxes. Therefore, it’s best to file before the deadline to avoid these penalties and delays.
Q10: Are there penalties for errors in my ITR filing? Yes, errors in your ITR filing can result in penalties, interest on unpaid taxes, and delays in processing your return. Common mistakes, such as incorrect income reporting, missing deductions, or mismatched TDS credits, can lead to scrutiny and additional charges. To avoid these issues, it is advisable to use a platform like TaxBuddy, which provides tools for error-free filing, ensures all necessary documents are included, and offers expert assistance for complex filings.
Q11: Can I make corrections in my ITR after filing? Yes, you can file a revised return if you realize that there were mistakes in your ITR after submission. The revised return can be filed before the end of the assessment year. If the error is related to income reporting, missed deductions, or TDS credits, filing a revised return allows you to correct these issues and avoid penalties. It’s important to submit a revised return promptly to ensure compliance and avoid unnecessary delays in processing your refund.
Q12: Does TaxBuddy support all tax regimes for ITR filing? Yes, TaxBuddy supports both the old and new tax regimes for ITR filing. The platform helps you choose the most beneficial tax regime based on your income and eligible deductions. TaxBuddy’s system ensures that you maximize your tax savings and comply with the applicable tax laws. Whether you prefer the old tax regime with exemptions and deductions or the simplified new tax regime, TaxBuddy will guide you through the process to ensure the most advantageous filing.
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