Top 10 Mistakes to Avoid While Filing Your Income Tax Return in AY 2025-26

Filing your Income Tax Return (ITR) is not just a legal obligation but also an opportunity to manage your finances better. However, even minor errors during filing can lead to delays in refunds, notices from the Income Tax Department, or even penalties. As we enter the Assessment Year (AY) 2025-26, it's essential to ensure your ITR filing is accurate and compliant.

In this article by CMA Knowledge, we’ll explore the top 10 mistakes to avoid while filing your ITR for AY 2025-26, along with practical tips and examples to help you file with confidence.

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1. Choosing the Wrong ITR Form

Why It’s a Mistake:

Each ITR form is designed for specific types of taxpayers. Filing the wrong form can make your return defective under Section 139(9).

Example:

A salaried person with capital gains files ITR-1 instead of ITR-2. This results in incorrect reporting and possible rejection.

Tip:

Check the Income Tax Department website or consult a tax expert to choose the correct ITR form based on your income sources, residential status, and capital gains.

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2. Failing to Report All Income Sources

Why It’s a Mistake:

All income—whether taxable or exempt—must be reported. Non-disclosure can trigger scrutiny or even penalties under Section 270A.

Commonly Missed Incomes:

• Interest from savings accounts or FDs
• Freelancing or side gigs
• Dividend income
• Capital gains from mutual funds or stocks
• Income from foreign assets or bank accounts

Tip:

Use Form 26AS, AIS, and TIS to cross-verify all reported income.

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3. Not Reconciling with Form 26AS, AIS, and TIS

Why It’s a Mistake:

Form 26AS, AIS (Annual Information Statement), and TIS (Taxpayer Information Summary) show the income reported by third parties. Any mismatch can lead to intimation under Section 143(1) or a notice under Section 139(9).

Tip:

Download and reconcile all three forms before finalizing your return. Correct any discrepancies through the AIS feedback portal if needed.

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4. Incorrect Claim of Deductions Under Chapter VI-A

Why It’s a Mistake:

Overclaiming deductions (like 80C, 80D, 80G) without proof or actual investment can invite penalties.

Example:

Claiming 80C deductions for PPF without actually investing during FY 2024-25.

Tip:

Keep investment proofs ready. Use a calculator to tally the maximum deduction limits.

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5. Skipping Reporting of Exempt Income

Why It’s a Mistake:

Even though it’s exempt, reporting such income is necessary for full disclosure.

Common Examples:

• Long-term capital gains up to Rs. 1 lakh (Section 112A)
• PPF or EPF interest
• Gifts from relatives
• Agricultural income

Tip:

Disclose exempt incomes in the “Exempt Income” section of the ITR form.

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6. Mistakes in Bank Account Details

Why It’s a Mistake:

Incorrect bank details can delay ITR refund processing.

Tip:

Verify the IFSC code, account number, and make sure the bank account is pre-validated on the income tax portal.

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7. Ignoring Clubbing of Income Provisions

Why It’s a Mistake:

If you invest in your spouse’s or minor child’s name and earn income, that income must be clubbed with yours under the Income Tax Act.

Example:

Interest from FD in wife’s name created from your funds must be added to your income.

Tip:

Understand clubbing provisions under Section 64 and apply them correctly in your return.

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8. Not Disclosing Foreign Assets and Income (If Applicable)

Why It’s a Mistake:

Resident taxpayers must disclose foreign bank accounts, property, or foreign income. Non-disclosure can attract huge penalties under the Black Money Act.

Tip:

If you’re an Ordinarily Resident, disclose all foreign assets in Schedule FA of the ITR.

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9. Failure to E-Verify the Return

Why It’s a Mistake:

Filing isn’t complete until you e-verify. If not done within 30 days, your return is treated as invalid.

Tip:

Use options like Aadhaar OTP, net banking, or DSC to e-verify quickly after submission.

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10. Filing the Return After the Due Date

Why It’s a Mistake:

Late filing attracts penalty under Section 234F, interest under 234A, and loss of carry-forward of losses.

Due Dates for AY 2025-26:

• 31st July 2025 for most individual taxpayers
• 31st October 2025 for audit cases

Tip:

Plan your documentation early. File before the deadline to avoid unnecessary financial loss.

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Final Thoughts: File Smart, Stay Stress-Free

Filing your income tax return correctly is just as important as filing it on time. These 10 mistakes are common but avoidable. Being aware and prepared can save you from future notices, penalties, and refund delays.

At CMA Knowledge, we recommend:

• Keeping financial documents organized
• Verifying details thoroughly
• Consulting a tax expert if your return is complex

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FAQs

1. What happens if I forget to e-verify my ITR?

Your return will be considered invalid if not verified within 30 days of submission.

2. Can I revise my ITR after filing?

Yes, you can file a revised return under Section 139(5) before 31st December 2025, if filed originally on or before due date.

3. Is interest from savings account taxable?

Yes. It is taxable under Income from Other Sources. However, you can claim deduction up to Rs. 10,000 under Section 80TTA.

4. Do I need to file ITR if my income is below the taxable limit?

It’s not mandatory, but filing can be beneficial for loan applications, visa, or refund claims.

5. Can salaried individuals file ITR-1 even if they have capital gains?

No. If you have capital gains, you must file ITR-2.

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Call to Action

If you found this article helpful, explore more income tax insights on CMA Knowledge. Stay informed, stay compliant, and make the most of your tax filings this year!