Filing Income Tax Returns (ITR) in India can be a complex process, and people often make common mistakes that can lead to delays, penalties, or even notices from the Income Tax Department. Here are some of the most frequent errors that you can avoid:
Income Tax Filing Mistakes
1. Choosing the Wrong ITR Form:
- Mistake: This is one of the most common blunders. There are various ITR forms (ITR-1, ITR-2, ITR-3, ITR-4, etc.), each applicable to different types of income and taxpayer categories. For example, ITR-1 (Sahaj) is for salaried individuals with income up to ₹50 lakh from salary, one house property, and other sources (excluding lottery or racehorse winnings). If you have capital gains, multiple house properties, or business/professional income, you’ll need ITR-2 or ITR-3.
- Consequence: Filing with the wrong form can make your return invalid or defective, requiring you to file a revised return.
- Solution: Carefully determine your income sources and taxpayer category to select the correct ITR form. Read our article If unsure, consult a tax professional.
2. Not Disclosing All Sources of Income:
- Mistake: Many taxpayers only declare their primary income (e.g., salary) and forget to report other sources like interest from savings accounts or fixed deposits, rental income, dividends, capital gains from shares or mutual funds, or freelance income. Even exempt income (like PPF interest) needs to be disclosed.
- Consequence: Undisclosed income, even small amounts, can lead to scrutiny, notices, and penalties (often 50% to 200% of the tax liability).
Solution: Ensure you report all income, regardless of the amount or whether it’s taxable or exempt. Refer to your Form 26AS and Annual Information Statement (AIS) for a comprehensive overview of your financial transactions.
3. Mismatch in Income and TDS Details (Form 26AS, AIS, TIS):
- Mistake: Failing to reconcile your income and Tax Deducted at Source (TDS) details as shown in Form 26AS, AIS (Annual Information Statement), and TIS (Taxpayer Information Summary) with your actual records (Form 16, salary slips, TDS certificates).
- Consequence: Discrepancies can trigger notices from the Income Tax Department, delay refunds, or even lead to assessment proceedings.
Solution: Download and carefully compare Form 16 (from employer), Form 26AS, and AIS from the Income Tax portal before filing. Ensure all figures match your records.
4. Missing the Filing Deadline:
- Mistake: Procrastinating and filing the ITR at the last minute or missing the deadline altogether (for most individuals, it’s September 15th, 2025 for AY 2025-26.
- Consequence: Late filing attracts a penalty (up to ₹5,000, or ₹1,000 if income is below ₹5 lakh), delays in processing refunds, and loss of ability to carry forward certain losses (like capital losses).
- Solution: Mark your calendar and gather all necessary documents well in advance to file your return on time.
5. Skipping ITR Verification After Filing:
- Mistake: Submitting your ITR online is not the final step. You must verify it within 30 days of filing. Many people forget this crucial step.
- Consequence: An unverified return is treated as invalid, meaning it’s as if you never filed it, leading to penalties and refund delays.
Solution: Verify your ITR immediately after submission using Aadhaar OTP, net banking, demat account, or by sending a signed ITR-V form to the CPC office in Bengaluru.
6. Incorrect Personal Information:
- Mistake: Errors in basic personal details like name, address, PAN, Aadhaar number, email ID, phone number, or bank account details.
- Consequence: Can lead to delays in processing, rejection of your return, and issues with receiving refunds.
- Solution: Double-check all personal information to ensure it matches your PAN and other official records. Ensure the bank account for refunds is pre-validated and active.
7. Not Claiming Eligible Deductions and Exemptions:
- Mistake: Many taxpayers miss out on claiming legitimate deductions under various sections (e.g., 80C for investments, 80D for health insurance, HRA, etc.) due to ignorance or lack of proper documentation. This becomes important especially if you file the return under the old tax regime .
- Consequence: You end up paying more tax than necessary.
- Solution: Be aware of all eligible deductions and exemptions. Keep all investment proofs, rent receipts, and other supporting documents handy.
8. Claiming Excessive or Unsubstantiated Deductions:
- Mistake: Conversely, some individuals claim deductions they are not eligible for or inflate the amounts without proper proof.
- Consequence: Can trigger scrutiny and notices from the Income Tax Department, leading to penalties.
- Solution: Only claim deductions that you can genuinely support with valid documents.
9. Not Reporting All Bank Accounts:
- Mistake: Even if only one bank account is pre-validated for refund, all active bank accounts (savings, current, NRO) must be reported in the ITR, except for dormant accounts.
- Consequence: Can raise red flags and lead to scrutiny.
- Solution: Disclose all your active bank accounts in your ITR
10. Ignoring Notices from the Income Tax Department:
- Mistake: Failing to respond promptly to notices received from the Income Tax Department (e.g., for defective returns, mismatches).
- Consequence: Can escalate minor issues into larger problems, including penalties and legal action.
- Solution: Always respond to notices within the stipulated time frame. If unsure, seek professional advice.
By being mindful of these common mistakes and paying attention to detail, taxpayers can ensure a smooth and hassle-free Income Tax Filing
Read our articles on income tax :
- INCOME TAX RETURNS FOR FY 2024-25 ( AY 2025-26 )
- File ITR1 for ay 2025-26 online
- Complete Guide to file ITR2 online
- INCOME TAX RATES / SLABS for FY 2024-25
- INCOME TAX REBATES FOR FY 2024-25
- TAX CALCULATOR FY 2024-25
To boost trust and authority, link out to official government pages: - Income Tax India e-Filing Portal
Note: The article has used information we got through a responsible AI APP and edited by us.