Common ITR Filing Mistakes to Avoid in AY 2025–26
Filing your Income Tax Return (ITR) is one of the most important financial responsibilities for every taxpayer in India. However, many individuals make errors that can result in notices, penalties, delayed refunds, or even scrutiny from the Income Tax Department. As the due date for ITR filing for AY 2025–26 approaches, it is essential to understand the common mistakes in ITR filing and how to avoid them.
In this article, we will discuss the most frequent errors, their consequences, and best practices for accurate and hassle-free compliance.
1. TDS-Income Mismatch
One of the most common ITR errors is a mismatch between the income declared in the return and the details in Form 26AS or AIS (Annual Information Statement).
For example, if your employer deducts Tax Deducted at Source (TDS) on salary but you forget to include interest income from bank deposits, the mismatch can trigger a notice. Always reconcile your declared income with AIS and 26AS before filing.
2. Inflated Deduction Claims
Many taxpayers attempt to reduce tax liability by overstating deductions under sections like:
80C (Investments, LIC, PF, ELSS)
80D (Medical insurance premium)
HRA exemption
However, making false claims without proof can backfire. Under Section 270A of the Income Tax Act, taxpayers may face a penalty of up to 200% of the tax evaded. Always keep proper documentation for claimed deductions.
3. Unreported High-Value Transactions
The Income Tax Department tracks high-value financial transactions through PAN and Aadhaar. If you fail to report them, your return can be flagged.
Examples include:
Cash deposits over ₹10 lakh in a financial year
Credit card spends exceeding ₹2 lakh
Large equity, mutual fund, or bond investments
Even if such transactions are legitimate, they must be disclosed to avoid unnecessary scrutiny.
4. Omitting Income Sources
Another common ITR filing mistake is leaving out secondary sources of income such as:
Savings account interest
Rental income
Capital gains from shares or mutual funds
Cryptocurrency income
Foreign income or overseas bank accounts
Even if certain income is exempt (for example, agricultural income), it still needs to be reported in the correct ITR form. Omitting income may lead to penalties and legal consequences.
5. Sudden Income Drop Without Justification
If your declared income shows a sharp decline compared to previous years, the tax department may raise queries. For instance, if you earned ₹15 lakh last year but report only ₹6 lakh this year without explanation, your case may be scrutinized.
Keep supporting documents such as medical bills, business loss records, or resignation papers ready to justify the drop.
6. Incorrect Job Switch Reporting
Taxpayers who change jobs often forget to consolidate Form 16s from both employers. This may lead to:
Underreporting of income
Duplicate deduction claims under 80C or HRA
Always combine salary details from all employers in the financial year before filing your return.
7. Wrong ITR Form Usage
Choosing the wrong ITR form can invalidate your return. For example:
Filing ITR-1 when you have capital gains or foreign income
Using ITR-4 when your turnover exceeds the prescribed limit
Check eligibility carefully and select the correct form (ITR-1, ITR-2, ITR-3, or ITR-4) as per your income sources.
8. Fake Entries or Forgery
Creating fake financial entries or concealing income is one of the most serious ITR filing mistakes. Under Section 271AAD of the Income Tax Act, penalties equal to the amount misreported can be imposed. In extreme cases, prosecution may also apply.
Always ensure that your ITR is based on genuine financial data backed by records such as bank statements, investment proofs, and Form 16.
✅ Best Practices for Error-Free ITR Filing
To avoid these mistakes, keep the following in mind:
Download and verify Form 26AS, AIS, and TIS before filing.
Collect all Form 16s if you switched jobs.
Disclose all income sources honestly.
Claim only valid deductions with proper proof.
Choose the correct ITR form as per your income type.
File your return well before the due date to avoid last-minute errors.
📌 Final Thoughts
The Income Tax Department has strengthened its monitoring systems with AI-based tools and data integration, which means even small mismatches or unreported transactions can get flagged. By being honest and cautious, you can avoid penalties, ensure timely processing, and enjoy faster income tax refunds.
Filing your ITR is not just a compliance exercise but also an opportunity to build trust with the tax system. Make sure you avoid these common ITR filing mistakes for AY 2025–26 and file accurately.