Top Income Tax Filing Mistakes to Avoid in India (2025)
Filing your Income Tax Return (ITR) is an important responsibility, whether you’re a salaried employee, freelancer, or business owner in India. However, every year, thousands of taxpayers face delayed refunds, notices, or penalties due to avoidable mistakes.
This detailed guide highlights the top income tax filing mistakes to avoid in India for FY 2024–25 (AY 2025–26). Whether you're filing for the first time or have done it before, these insights can save you time, stress, and money.
---📌 1. Choosing the Wrong ITR Form
Filing your ITR using the wrong form is one of the most common errors. The Income Tax Department provides multiple forms based on your income source—salary, capital gains, freelancing, etc.
- ITR-1: For salaried individuals (income up to ₹50L)
- ITR-2: For those with capital gains, more than one house property, or foreign assets
- ITR-3: For business or professional income
- ITR-4: For presumptive income under Section 44AD/ADA
Example: If you’re salaried and also sold mutual funds, ITR-1 is invalid—you must file ITR-2.
---💡 2. Not Reporting All Income Sources
Many people forget to disclose certain incomes that are not part of their salary. The Income Tax Department matches this data through Form 26AS and AIS (Annual Information Statement).
Commonly missed income includes:
- Interest from fixed deposits or savings accounts
- Dividend income
- Capital gains from mutual funds, shares, or property
- Freelance or side hustle earnings
Tip: Cross-verify all your income from Form 26AS and AIS before filing.
---🚫 3. Not Linking PAN with Aadhaar
The government has made it mandatory to link your PAN card with Aadhaar. Failing to do so can make your PAN inoperative—and you won’t be able to file your ITR or claim refunds.
Deadline: Ensure your PAN is linked with Aadhaar by the current deadline. You can check this on the IT portal.
---📅 4. Missing the ITR Filing Deadline
Late filing of ITR leads to penalties under Section 234F and restricts you from carrying forward certain losses.
- Deadline for individuals (non-audit): 31 July 2025
- Belated filing deadline: 31 December 2025 (with penalty)
Penalty: ₹1,000 to ₹5,000 based on your income level.
---🧾 5. Not Verifying the ITR After Filing
Filing your return isn't enough—you must also verify it. Failing to verify within 30 days renders the return invalid.
Ways to verify:
- Via Aadhaar OTP
- Net banking
- Demat account
- Sending ITR-V physically to CPC Bengaluru
🧮 6. Ignoring Form 26AS and AIS
Form 26AS and AIS provide all your tax-related details—TDS, advance tax, interest earned, and high-value transactions. Not checking them can lead to under-reporting of income or missed tax credits.
Tip: Always reconcile these with your ITR before submission.
---📉 7. Not Reporting Capital Gains Properly
People often forget to report capital gains from shares, mutual funds, crypto, or real estate. The tax rate and treatment differ based on short-term or long-term holding periods.
- Equity LTCG over ₹1 lakh: Taxed at 10%
- Debt fund LTCG: Now taxed as per slab (post-2023 changes)
- STCG: Taxed at 15%
Important: Report both gains and losses. Capital losses can be carried forward for 8 years.
---📉 8. Claiming Wrong Deductions
Many taxpayers claim deductions without supporting proofs, or under the wrong section:
- Section 80C: PPF, ELSS, LIC, school fees
- Section 80D: Health insurance premiums
- Section 80G: Donations (with receipt & PAN of donee)
Tip: Double-check deductions with proofs to avoid future scrutiny.
---📦 9. Using the Wrong Assessment Year
This sounds basic but is often overlooked. If you’re filing for income earned between April 2024–March 2025, then:
- Correct AY: 2025–26
Wrong AY = Defective return. Your return could be rejected or refund delayed.
---🔄 10. Forgetting to Revise or Update Return
If you discover an error post-submission, don’t panic. You can file a revised return before 31 December 2025.
Also, if you missed filing earlier, you can use the Updated Return (Section 139(8A)) to file up to 2 years later—with penalty.
---📚 Real-Life Example
Ashwin, a 28-year-old software engineer forgot to include ₹12,000 of interest income in his ITR. A few months later, he received a notice under Section 143(1)(a). He filed a revised return including the income and paid the shortfall with interest. Had he cross-checked AIS earlier, he would have avoided the hassle.
---📝 Final Thoughts – File Smart, File Right
Filing income tax returns is more than just entering salary details—it’s about reporting your full financial picture honestly and accurately. By avoiding these top 10 mistakes, you’ll save yourself from stress, legal issues, and penalties.
Key Reminders:
- ✔️ Choose the correct ITR form
- ✔️ Check Form 26AS, AIS, and Form 16
- ✔️ Verify ITR after filing
- ✔️ Keep supporting documents ready
Consider using trusted tax platforms like Cleartax, TaxBuddy, or Groww, or consult a CA if you have multiple income sources or capital gains.
Tax is your financial responsibility—own it wisely!
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