Avoid costly errors this tax season! Discover the 5 most common mistakes people make while filing their income tax return—and learn smart, practical ways to avoid them. Whether you’re a salaried employee, freelancer, or small business owner, this guide helps you file accurately, save time, and stay compliant with the Income Tax Department.
Filing your income tax return might seem straightforward, but even small oversights can lead to penalties, delays, or unwanted scrutiny from the Income Tax Department. From incorrect personal details to missed deductions and mismatched Form 26AS entries, these common mistakes can cost you more than just money. In this article, we break down the 5 most frequent errors taxpayers make—and offer clear, actionable tips to help you avoid them and file your ITR with confidence.
As the September 15 deadline for filing Income Tax Returns (ITR) approaches, taxpayers across India are rushing to complete their filings. But in the haste, many commit avoidable errors that can lead to penalties, delayed refunds, or even scrutiny notices. Whether you’re a salaried employee, freelancer, or small business owner, steering clear of these mistakes is crucial.
Here are the top 5 ITR filing mistakes—and expert tips to avoid them:
1️⃣ Choosing the Wrong ITR Form
Why it matters: Filing with the incorrect form (e.g., using ITR-1 instead of ITR-2) can result in rejection or misreporting.
Quick Fix:
- Use the Income Tax Department’s ITR Form Guide to match your income type with the correct form.
- Salaried individuals with capital gains or foreign assets should opt for ITR-2.
- Freelancers and business owners may need ITR-3 or ITR-4.
2️⃣ Not Disclosing Foreign Assets
Why it matters: Non-disclosure of foreign bank accounts, stocks, or properties can trigger notices under Black Money Act provisions.
Quick Fix:
- Declare all foreign holdings—even dormant accounts.
- Use Schedule FA in the ITR form to report foreign assets.
3️⃣ Ignoring Multiple Form 16s
Why it matters: If you’ve switched jobs during the financial year, you’ll receive multiple Form 16s. Failing to report all sources can lead to underreporting.
Quick Fix:
- Aggregate income from all employers.
- Reconcile TDS from each Form 16 with your AIS (Annual Information Statement).
4️⃣ Not Reporting Exempt Income
Why it matters: Income like gratuity, leave encashment, or agricultural income may be exempt—but must still be disclosed.
Quick Fix:
- Report exempt income under the relevant section (e.g., Section 10).
- If such income is used for investments, disclose it to avoid scrutiny under Section 133(6) or 148A.
5️⃣ Blindly Copying AIS/TIS Data
Why it matters: AIS (Annual Information Statement) and TIS (Taxpayer Information Summary) may contain errors or outdated info.
Quick Fix:
- Cross-check AIS/TIS entries with your bank statements, Form 26AS, and investment records.
- Correct discrepancies before filing.
🆕 Additional Tips for 2025 Filers
- Choose the Right Tax Regime: Old vs New regime selection impacts deductions. Use a regime comparison calculator.
- File Early: Avoid last-minute rush and server slowdowns. Filing early also speeds up refunds.
- Use Digital Signature (DSC): For professionals and businesses, DSC adds authenticity and speeds up processing.
- Track Refund Status: After filing, use the ITR Refund Tracker to monitor progress.
📣 Final Word
Avoiding these common mistakes not only ensures compliance but also protects you from penalties and notices. For students, job seekers, and working professionals, understanding tax basics is a step toward financial literacy.
