It’s Income Tax Return (ITR) filing season for Assessment Year (AY) 2025-26 (which covers income earned in Financial Year 2024-25), and whether you’re a salaried professional, a freelancer, or a small business owner, now’s the time to tread carefully. While digital filing has made things faster, even minor missteps can lead to notices from the tax department, delayed refunds, or penalties.
With the Income Tax Department tightening its data tracking through tools like the Annual Information Statement (AIS) and Form 26AS, financial data is more interlinked than ever. This means discrepancies stand out, especially with pre-filled forms becoming more common.
Key Mistakes to Avoid This ITR Filing Season
Here are some crucial errors taxpayers often make and how you can avoid them:
1. Choosing the Wrong ITR Form
Selecting the incorrect ITR form is a common pitfall. Each form (ITR-1 to ITR-7) is designed for specific income sources and taxpayer categories.
- How to avoid it: Carefully determine which form applies to you based on your income (salary, house property, business, capital gains, etc.) and residency status. For example, ITR-1 (Sahaj) is for resident individuals with income up to ₹50 lakhs from salary, one house property, and other sources, while ITR-3 is for those with business or professional income.
2. Not Reporting All Income Sources
Even small income amounts can’t be ignored. This includes interest from savings accounts or fixed deposits, rental income, dividends, capital gains from shares or mutual funds, and income from previous employers if you changed jobs.
- How to avoid it: Go through all your financial documents thoroughly—bank statements, Form 16, Form 16A, and other certificates. Cross-reference these with your AIS and Form 26AS to ensure every penny is accounted for. Even exempt income needs to be disclosed under the correct section (Schedule EI).
3. Mismatched Information Across Documents
Discrepancies between your Form 16 (from your employer), Form 26AS (tax credit statement), and AIS/Taxpayer Information Summary (TIS) can trigger scrutiny.
- How to avoid it: Before filing, download and meticulously compare these documents from the Income Tax portal. Ensure all income, TDS/TCS amounts, and other financial transactions match what you’re reporting in your ITR. If you spot differences in AIS/TIS, use the online feedback mechanism to report them.
4. Incorrect Personal and Bank Details
Providing inaccurate personal information (name, PAN, Aadhaar, address, email, mobile number) or wrong bank account details for refunds can cause major headaches.
- How to avoid it: Double-check every personal detail against your official documents. Make sure your bank account details (account number, IFSC code) are accurate and pre-validated on the Income Tax portal to ensure seamless refund processing.
5. Forgetting to E-Verify Your ITR
Simply submitting your ITR isn’t enough; it must be e-verified within 30 days of filing, or it will be considered invalid.
- How to avoid it: E-verify your ITR immediately after submission. You can do this using Aadhaar OTP, Net Banking, or a Digital Signature Certificate (DSC).
6. Missing Out on Eligible Deductions and Exemptions
Failing to claim all applicable deductions (e.g., under Section 80C, 80D, 80G, 80E, 80EE/80EEA, 80EEB, 80DDB) means you could be paying more tax than necessary. For AY 2025-26, there are enhanced disclosure requirements for several deductions.
- How to avoid it: Gather all investment proofs, receipts, and relevant documents to claim every deduction and exemption you’re eligible for. Stay updated on the new, more detailed disclosure requirements for various deductions.
7. Choosing the Wrong Tax Regime
For FY 2024-25, the new tax regime under Section 115BAC is the default. Not making an informed decision about sticking with the old regime or opting for the new one can significantly impact your tax liability.
- How to avoid it: Use online calculators or consult a tax advisor to compare your tax liability under both regimes before making your choice.
8. Missing the Filing Deadline
Filing your ITR after the due date (which is September 15, 2025, for non-audit cases for AY 2025-26) can lead to penalties, interest on unpaid tax, and loss of benefits like carrying forward losses.
- How to avoid it: File your ITR well in advance of the deadline to avoid any last-minute stress or penalties.
9. Ignoring Foreign Income or Assets
If you’re an Indian resident with income earned abroad or holding foreign assets (like bank accounts, property, or investments), failing to disclose them can lead to severe penalties under the Black Money Act.
- How to avoid it: Fully disclose all foreign income and assets under the relevant schedules to ensure compliance with tax laws.
By being aware of these common mistakes and taking proactive steps to ensure accuracy, you can make your ITR filing for AY 2025-26 a smooth and stress-free process. If you’re ever unsure, don’t hesitate to seek guidance from a tax professional.
Do you have any specific questions about deductions or which ITR form might be right for you?