Filing your Income Tax Return (ITR) may feel like just another annual task but getting it right can save you a ton of hassle (and sometimes from paying extra). With new tax regimes, evolving deduction rules, and stricter scrutiny from the tax department, it’s easy to make mistakes while filing, even if you’re using online platforms or depending on a professional.
But don’t worry. In this guide, you’ll walk through the most common ITR filing mistakes people make and how you can steer clear of them. Whether you’re a salaried employee, a freelancer, or a small business owner, these tips can help you file accurately, avoid penalties, and get your rightful refund faster.
Choosing the Wrong ITR Form
Many taxpayers unknowingly select the incorrect ITR form. For example, salaried individuals with capital gains or multiple house properties often incorrectly choose ITR-1 instead of ITR-2.
Types of ITR Forms
The online filing portal has different types of forms for different purposes.
- ITR-1 (Sahaj) is for salaried individuals earning up to ₹50 lakh with income from one house property.
- ITR-2 is for those with capital gains, more than one property, or foreign income.
- ITR-3 is for individuals running a business or profession.
- ITR-4 (Sugam) is for presumptive income taxpayers (like freelancers or small businesses) earning below ₹50 lakh.
If you pick the wrong form, your return may be considered defective, and you’ll need to refile.
Not Reporting All Income Sources
You might think it’s okay to skip interest income from your savings account or rent from a second flat you own. But every income counts.
How to Avoid
Under the Income Tax Act, you must report all taxable income, including:
- Interest on savings and FDs
- Capital gains (short-term and long-term)
- Freelance or side hustle income
- Dividends, lottery winnings, etc.
Ignoring Form 26AS and AIS
Many filers submit their ITR without checking these forms and end up with mismatches in income or TDS.
How to Avoid:
- Form 26AS contains TDS, advance tax, and self-assessment tax details.
- AIS shows a more detailed income snapshot—interest, dividends, securities transactions, etc.
Always match your ITR entries with Form 26AS and AIS to avoid discrepancies and notices from the tax department.
Forgetting to Declare Exempt Income
“Exempt” doesn’t mean “ignore”. Taxpayers often forget to declare:
- Interest on PPF
- Tax-free LTCG (up to ₹1 lakh from equity)
- Agricultural income
- Gifts from relatives
How to Avoid
Report all exempt income under the correct ITR section. This ensures transparency and protects you during scrutiny.
Incorrect Claim of Deductions Under 80C, 80D, etc.
People often claim ineligible deductions or use incorrect amounts. For instance, claiming ₹1.5 lakh under 80C but not actually investing that much.
How to Avoid
Keep proof of:
- Life insurance, ELSS, PPF, NSC (80C)
- Health insurance (80D)
- Education loan interest (80E)
- Donations (80G)
Don’t overclaim. The Income Tax Department may ask for receipts during scrutiny.
Using Incorrect Bank Details
You might enter the wrong bank account number or forget to update an old, inactive one. Result? Delayed refund or no refund at all.
How to Avoid
Double-check:
- Account number
- IFSC code
- Account type (Savings/Current)
- That the account is linked with PAN and validated on the e-filing portal.
Not Verifying the ITR After Submission
Filing is not complete unless you verify your return. Many taxpayers forget this final step, which invalidates the submission.
How to Avoid
Verify your ITR within 30 days (reduced from 120 days) of filing using:
- Aadhaar OTP
- Net banking
- Demat account
- Bank ATM or physical ITR-V (posted to CPC, Bengaluru)
Missing the Due Date
Filing after the due date can lead to penalties up to ₹5,000, loss of interest on refund, and even disqualification from some deductions.
How to Avoid
Mark the filing deadline (usually July 31 for individuals). Plan your documentation early and don’t wait till the last moment when portals get overloaded.
Ignoring Advance Tax or Self-Assessment Tax
If your tax liability exceeds ₹10,000 after TDS, you’re supposed to pay advance tax. Many salaried professionals with capital gains miss this.
How to Avoid
- Calculate total tax liability.
- Deduct TDS already paid.
- If balance exceeds ₹10,000, pay it in four advance tax installments (June, Sept, Dec, Mar).
- If you missed that, pay self-assessment tax before filing.
Skipping Income from Previous Employers
If you switched jobs during the financial year, don’t report income from just your last employer.
How to Avoid
- Collect Form 16 from all employers.
- Include salary income from each of them in your return.
- Failing to do so may result in a mismatch with Form 26AS.
Incorrect Disclosure of Capital Gains
Misreporting or underreporting capital gains from shares, mutual funds, or real estate is common, either due to confusion or lack of proper documentation.
How to Avoid
- Use broker statements or AIS to compute gains.
- Mention the correct purchase and sale date, indexation, and exemptions if applicable (e.g., Section 54 for house property).
- File under ITR-2 if you have capital gains.
Failing to Club Minor or Spouse’s Income
Under clubbing provisions, income earned by a minor child or spouse through indirect transfer needs to be added to your income.
How to Avoid
- Club minor’s income (except disability income) with your own.
- Club spouse’s income if assets are transferred without adequate consideration.
Declare such income properly to avoid penalty.
Not Maintaining Proof for Deductions Claimed
Claiming deductions without having any documentary proof can backfire if your return gets selected for scrutiny.
How to Avoid
- Keep digital or physical copies of all investment and premium receipts.
- Save rent agreements and PAN of landlord (for 80GG).
- Maintain 8 years’ worth of documentation just in case.
Selecting the Wrong Assessment Year
Filing for the wrong Assessment Year (AY) is more common than you’d think. For example, filing FY 2024–25 under AY 2024–25 instead of AY 2025–26.
How to Avoid
Always double-check that you’re selecting the right AY.
- AY 2025–26 corresponds to FY 2024–25
Most portals pre-fill this, but manual errors can still happen.
Overlooking HRA When Not Mentioned in Form 16
If your employer doesn’t consider your rent receipts or HRA exemption, you may lose out on tax savings.
How to Avoid
You can still claim HRA exemption under Section 10(13A) while filing your ITR—just enter the actual rent paid and calculate the exemption manually.
Not Opting for the Correct Tax Regime
Post Budget 2020, you can choose between old and new tax regimes. Picking one blindly could mean you’re paying more tax than needed.
How to Avoid:
- Use online calculators to compare taxes under both regimes.
- Opt for the one that gives the maximum savings based on your deductions.
Filing ITR When You Don’t Need To (Or Not Filing When You Should)
Some taxpayers don’t file returns, assuming TDS was already deducted. Others file unnecessarily when they fall under exempt income.
How to Avoid
File ITR if:
- Your gross total income > basic exemption limit
- You want to claim a refund
- You have foreign income or assets
- You’ve deposited over ₹1 crore, spent ₹2 lakh+ on foreign travel or ₹1 lakh+ on electricity
Last Thoughts: File Smart, File Right
Filing your ITR correctly isn’t just about staying compliant; it’s about taking control of your finances. By avoiding these common mistakes, you not only minimize the chances of penalties or notices but also ensure faster refunds and better tax savings.
Here’s something to keep in mind—tax filing isn’t just a year-end obligation. It’s a chance to review your income, savings, and financial discipline. Use it as an opportunity to plan better, invest smarter, and stay one step ahead of your taxes.
Let your tax return be a reflection of your financial confidence, not confusion.
FAQs
What if I miss the ITR filing deadline?
You can file a belated return with a late fee of up to ₹5,000. However, you can’t carry forward certain losses and may lose interest on your refund.
Can I revise my ITR after submission?
Yes, you can revise your ITR any time before the end of the assessment year (usually March 31 of the next year).
Is it mandatory to verify ITR after filing?
Yes. If you don’t verify it within 30 days, it will be treated as not filed.
Do I need to file ITR if TDS is already deducted?
Yes, if your gross total income exceeds the exemption limit, even if TDS is deducted.
Where can I file my ITR online?
You can file your ITR on the official Income Tax e-Filing portal.
Discover fixed income investments with Jiraaf, a SEBI registered online bonds platform that educates and brings access to a wide array of bonds. Sign up today to explore diversified fixed income investment opportunities to support your goal-based wealth creation journey. Start investing!
