AY 2025-26 ITR Filing: 9 Common Mistakes to Avoid for Smooth Tax Submission

1. Selecting the Incorrect ITR Form

The Income Tax Department offers various ITR forms tailored for different taxpayer categories based on their income sources and status. Using the wrong form is a basic mistake that will lead to your return being marked as 'defective'.

ITR-1 (Sahaj): For resident individuals with a total income up to ₹50 lakh from salary, one property, other sources (like interest), and agricultural income of up to ₹5,000. Not applicable for directors of companies or those possessing unlisted equity shares.

ITR-2: For individuals and HUFs who do not have income from a business or profession (appropriate for those with capital gains, multiple properties, foreign assets/income).

ITR-3: For individuals and HUFs earning income from a business or profession.

ITR-4 (Sugam): For individuals, HUFs, and Firms (excluding LLPs) choosing the presumptive income scheme under Sections 44AD, 44ADA, or 44AE.

How to Avoid: Carefully examine the applicable criteria for each ITR form on the official Income Tax portal prior to beginning your filing process. Select the one that accurately reflects all your income sources for FY 2024-25.

While this may appear straightforward, mistakes in this area are frequent and can lead to major issues, particularly with communication and processing refunds.

Key Fields: Carefully check your PAN, Aadhaar number, Name (exactly as it appears on PAN), Date of Birth, complete Address, and contact information (Email ID and Mobile Number must be current and accessible).

Bank Account Information: Make sure you provide the correct IFSC code and account number for the bank account designated for your refund. Additionally, pre-validate this bank account on the Income Tax portal.

How to Avoid: Cross-check all personal details with your official documents (PAN card, Aadhaar card). Update your contact and bank information on the Income Tax portal if needed before filing.

Neglecting these important documents is one of the most significant errors taxpayers commit.

What they encompass:

• Form 26AS: Your consolidated tax statement displaying TDS (Tax Deducted at Source), TCS (Tax Collected at Source), advance tax paid, self-assessment tax paid, and more.
• AIS (Annual Information Statement): A detailed statement with information on various financial transactions reported by different entities (banks, mutual funds, registrars), including interest, dividends, securities transactions, etc.
• TIS (Taxpayer Information Summary): A summarized overview of information categories from AIS.

Reasons to Reconcile: The Income Tax Department extensively utilizes AIS/TIS data. Any inconsistency between the income and taxes declared in your ITR versus the data in these forms can trigger automatic scrutiny or notices.

How to Avoid: Prior to filing, download and carefully examine your Form 26AS, AIS, and TIS from the Income Tax portal. Ensure that the income details (salary, interest, capital gains) and taxes paid/deducted align with what you are reporting in your ITR. If there are discrepancies in AIS/TIS, you can provide feedback online. Report all income shown in these statements, even if it’s minor.

Errors made during manual calculations can result in incorrect tax liability or refund amounts.

Common Errors: Miscalculating total income, misapplying deduction limits (for instance, exceeding the ₹1.5 lakh cap for 80C collectively), errors in capital gains calculations, using incorrect tax slab rates (make sure to select the right rates for your preferred regime - New or Old), miscalculating interest as per Sections 234A, 234B, and 234C.

How to Avoid: Utilize the official Income Tax utility/software or reputable online tax filing services, which handle most calculations automatically. Nevertheless, always verify the numbers, particularly deductions claimed and the final tax computation, prior to submission.

Delaying until the last moment increases the likelihood of mistakes and the risk of missing the filing deadline altogether.

Deadline: The standard due date for filing ITR for AY 2025-26 (for individuals/HUFs not requiring an audit) is usually July 31, 2025. Always check the official deadline released by the CBDT.

Consequences: Filing late incurs a fee under Section 234F, interest on unpaid tax under Section 234A, and you may forfeit the chance to carry forward certain losses (such as capital losses).

How to Avoid: Begin early! Collect your documents and start the filing process well ahead of the deadline to allow sufficient time for review and adjustments.

Numerous taxpayers, especially those opting for the Old Tax Regime, overlook valid deductions and exemptions, leading to increased tax liabilities.

How to Avoid: Examine all your expenditures and investments made throughout FY 2024-25 (like insurance premiums, PPF, ELSS, tuition fees, donations, HRA if relevant) and ensure all eligible deductions/exemptions are claimed with appropriate documentation.

Not accurately reporting all income sources can create complications.

Examples: Omitting interest accrued from savings accounts or fixed deposits, misclassifying capital gains (short-term vs. long-term), failing to mention rental income, or neglecting income from freelance activities.

How to Avoid: Aggregate income details from every source – salary slips, bank statements, broker documents, rent receipts, etc. Ensure everything is reported under the correct income category in the ITR form.

Filing your ITR alone isn’t sufficient; it must be verified to be deemed valid.

Timeline: You generally have 30 days from the filing date to complete the verification of your return.

Methods: Employ options such as Aadhaar OTP, Net Banking login, Bank Account EVC, Demat Account EVC, or mailing a signed physical copy (ITR-V) to CPC Bengaluru (though e-verification is faster and is preferred).

Consequence: An ITR that hasn’t been verified is considered as if it was never filed.

How to Avoid: E-verify your return immediately after filing utilizing your chosen method.

Since AY 2021-22, taxpayers can select between the Old Tax Regime (which includes deductions/exemptions) and the New Tax Regime (with reduced slab rates and fewer deductions). The New Regime is the default option for AY 2024-25 onward, but you still have the choice of opting for the Old one.

Mistake: Failing to calculate tax liability under both regimes before deciding which one is more advantageous for AY 2025-26 based on your specific income and potential deductions from FY 2024-25.

How to Avoid: Utilize online calculators or consult a tax advisor to contrast your tax obligations under both regimes before finalizing your choice during filing.

Filing taxes requires careful attention. By being mindful of these frequent errors and taking proactive measures to avert them – meticulously checking details, reconciling with departmental data, comprehending form requirements, adhering to deadlines, and promptly verifying – you can ensure your ITR submission for AY 2025-26 is precise, compliant, and devoid of stress.

Disclaimer: Tax regulations are subject to change. While this blog post offers general information, it isn’t a replacement for professional advice. For tailored support regarding your tax situation, connect with the tax experts at myitronline.

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