As the due dates for filing Income Tax Returns (#ITRs) for Assessment Year (AY) 2025–26 approach, taxpayers and professionals alike must ensure that returns are filed accurately, timely, and in compliance with the latest regulatory changes. Despite increased awareness and digitization, several common errors continue to recur each year—some of which may lead to notices, penalties, or delayed refunds.
Here are the top five mistakes to avoid while filing your ITR this year:
1. Ignoring the Correct ITR Form
One of the most frequent yet avoidable mistakes is selecting the incorrect ITR form. Taxpayers often choose the form based on assumptions or past filings, overlooking changes in income sources or amendments in the Income Tax Rules.
Key Considerations:
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Salaried individuals with capital gains or foreign assets must not use ITR-1 (Sahaj).
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Professionals under presumptive taxation should opt for ITR-4 only if turnover is within limits and other eligibility conditions are met.
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Choosing the wrong form may render the return defective (u/s 139(9)), requiring refiling within the stipulated time.
2. Mismatch Between Form 26AS / AIS and Reported Income
With the introduction of Annual Information Statement (AIS) and Taxpayer Information Summary (TIS), the Income Tax Department now has an extensive record of a taxpayer’s financial transactions.
Common Issues:
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Omitting interest income from savings, FDs, or bonds that appear in AIS.
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Failing to reconcile dividend income or high-value mutual fund transactions.
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Not accounting for foreign remittances or overseas investments reflected in AIS.
Tip: Always cross-verify income details with Form 26AS, AIS, and TIS before finalizing your return to avoid automated notices or scrutiny.
3. Overlooking Foreign Assets or Income Disclosure
Non-disclosure of foreign assets or income is a serious compliance breach under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Who Needs to Disclose:
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Resident individuals (as per Indian tax laws) with overseas bank accounts, stocks, real estate, or any foreign-sourced income.
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Even jointly held assets or signing authority must be disclosed in Schedule FA of the applicable ITR.
Consequences: Failure to report may lead to penal provisions, including fines up to ₹10 lakhs and prosecution in extreme cases.
4. Incorrect Claim of Deductions or Exemptions
Taxpayers often claim deductions under Chapter VI-A or exemptions under capital gains without proper documentation or eligibility.
Examples:
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Claiming Section 80G deductions without valid donation receipts.
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Incorrectly availing 80C deductions for non-eligible instruments (e.g., tuition fees for non-dependent children).
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Misreporting capital gains exemption under Section 54/54F without completing reinvestment within specified timeframes.
Best Practice: Maintain a clear audit trail—receipts, investment proofs, and computation worksheets—to substantiate all claims if questioned.
5. Neglecting to Verify the ITR after Filing
Many filers assume that submitting the ITR online completes the process. However, e-verification (within 30 days) is mandatory to validate the return.
Options for e-Verification:
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Aadhaar OTP
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Net banking
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Demat account verification
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Sending signed ITR-V to CPC, Bengaluru
Impact of Non-Verification: Returns not verified are treated as not filed, which could lead to interest, late filing fees (u/s 234F), or loss of carry forward of losses.
Final Thoughts
As Chartered Accountants, it is our responsibility to guide clients and the public in ensuring tax compliance with diligence. With increased transparency, AI-enabled scrutiny, and expanding digital footprints, even minor errors can trigger major consequences.
Filing a correct and complete ITR is not just a regulatory requirement—it’s a critical component of sound financial stewardship. Let us help taxpayers stay informed, compliant, and ahead of potential pitfalls in AY 2025–26.