Filing Income Tax Returns (ITR) can be a daunting task, especially with the evolving tax laws and digital processes. As taxpayers prepare to file their returns for the financial year 2024-25, avoiding common pitfalls becomes crucial to ensure compliance and prevent unnecessary penalties. Here are the most critical mistakes to avoid during the ITR filing process.

1. Choosing the Wrong ITR Form

One of the most fundamental errors taxpayers make is selecting an incorrect ITR form. The Income Tax Department provides different forms for various categories of taxpayers:

  • ITR-1 (Sahaj): For individuals with income up to ₹50 lakh from salary, pension, or house property
  • ITR-2: For individuals with capital gains or foreign income
  • ITR-3: For business owners and professionals
  • ITR-4 (Sugam): For presumptive taxation scheme users

Filing with the wrong form can lead to processing delays and may require revision. Carefully assess your income sources and choose the appropriate form to avoid complications.

2. Incorrect or Missing Personal Information

Basic details like PAN number, Aadhaar number, name, address, and bank account information must be accurate and consistent across all documents. Even minor discrepancies can trigger notices from the tax department. Ensure that:

  • Your name matches exactly with PAN card details
  • Bank account numbers are correctly entered for refund processing
  • Mobile number and email address are current for receiving communications
  • Address details are updated if you've relocated

 3. Incomplete Income Disclosure

A significant compliance issue arises when taxpayers fail to declare their complete income profile, resulting in understatement of taxable earnings. Frequently missed income categories include:

  • Financial instrument earnings - returns from bank deposits, government securities, and corporate bonds
  • Investment distributions - payouts from equity holdings and mutual fund schemes
  • Asset disposal profits - gains realized from selling securities, real estate, or other investments
  • Property-based earnings - revenue generated from leasing residential or commercial spaces
  • Independent professional services - compensation from contract work, advisory roles, or specialized consulting
  • Cryptocurrency and digital asset transactions - profits from trading or disposing of virtual currencies Tax authorities maintain comprehensive databases through annual information statements (Form 26AS and Annual Information Statement) that track income flows across various sources. When taxpayers' filed returns don't align with this centralized income data, it triggers automated flags for review and potential enforcement action. This mismatch often leads to demand notices, interest charges, and penalty assessments.

4. Inadequate Documentation and Record Keeping

Proper documentation is essential for substantiating claims made in your ITR. Common documentation errors include:

  • Not maintaining receipts for claimed deductions
  • Missing investment proofs for Section 80C claims
  • Inadequate records for business expenses
  • Absence of supporting documents for medical insurance premiums
  • Incomplete capital gains computation worksheets

Maintain organized records throughout the year and ensure all claims are backed by appropriate documentation.

5. Incorrectly Claiming Deductions

Taxpayers often make mistakes while claiming deductions under various sections:

Section 80C Deductions: The maximum limit is ₹1.5 lakh. Ensure you don't exceed this limit and have valid investment proofs for EPF, PPF, ELSS, NSC, and other qualifying investments.

Section 80D (Medical Insurance): Verify premium amounts and ensure policies are in your name or for eligible family members. The deduction limits vary based on age and relationship.

House Property Deductions: When claiming deductions for home loan interest, ensure you don't exceed the prescribed limits and have necessary certificates from lenders.

Standard Deduction: For salaried individuals, the standard deduction is ₹50,000. Don't forget to claim this automatic deduction.

6. Mishandling Capital Gains

Capital gains taxation is complex, and errors in this section are common:

  • Incorrect calculation of holding period for determining short-term vs. long-term gains
  • Wrong cost of acquisition computation, especially for assets acquired before 2001
  • Failing to claim indexation benefits for long-term capital gains
  • Not reporting capital gains from mutual fund switches or redemptions
  • Incorrect application of capital gains exemptions under sections 54, 54EC, or 54F

Ensure you understand the nuances of capital gains computation or seek professional help for complex transactions.

7. Bank Account and Refund Related Errors

Refund processing can be delayed due to:

  • Incorrect bank account details leading to refund failures
  • Mismatched account holder names with PAN card details
  • Inactive or closed bank accounts
  • Not pre-validating bank accounts through the e-filing portal

Verify and pre-validate your bank account details well before filing your return to ensure smooth refund processing.

8. Missing Filing Deadlines

  • The deadline for filing Income Tax Returns (ITR) for the financial year 2024–25, which was originally July 31, 2025, has been extended to September 15, 2025, as per the latest press release from the Income Tax Department. Failing to file your return by this revised deadline may lead to various consequences, including penalties and interest on unpaid taxes as mentioned below:-
  • Late filing fees ranging from ₹1,000 to ₹10,000
  • Loss of carry-forward benefits for certain losses
  • Interest on outstanding tax liability
  • Restriction on filing belated returns beyond December 31, 2025

Set reminders and file your return well before the deadline to avoid these penalties.

9. Ignoring Form 26AS and AIS Reconciliation

Form 26AS and Annual Information Statement (AIS) contain crucial information about your tax-related transactions. Failing to reconcile these with your ITR can lead to:

  • Mismatched TDS claims
  • Unreported income issues
  • Processing delays
  • Tax demand notices

Carefully review these statements and ensure all information is correctly reflected in your ITR.

10. Not Utilizing Available Tax Benefits

Many taxpayers miss out on legitimate tax benefits:

  • New vs. Old Tax Regime: Compare both regimes to choose the more beneficial option
  • Employer Benefits: LTA, medical reimbursements, and other tax-free allowances
  • Investment Options: ELSS, NPS contributions, and other tax-saving instruments
  • Donations: Claiming deductions under Section 80G for charitable contributions

11. Digital Signature and Verification Issues

For returns requiring audit or specific categories of taxpayers, proper digital signature or verification is crucial:

  • Ensure your Digital Signature Certificate (DSC) is valid and current
  • Complete the verification process within 120 days of filing
  • Use appropriate verification methods (Aadhaar OTP, EVC, or physical verification)

Conclusion

Filing ITR for FY 2024-25 requires careful attention to detail and thorough preparation. By avoiding these common mistakes, taxpayers can ensure smooth processing of their returns and avoid unnecessary penalties or scrutiny from the tax department.

When in doubt, consider consulting a qualified tax professional or chartered accountant, especially for complex financial situations involving multiple income sources, capital gains, or business income. Remember, accurate and timely filing not only ensures compliance but also helps in building a clean tax record for future financial dealings.

Start preparing early, maintain proper documentation, and double-check all entries before submitting your ITR to make the process hassle-free and error-free. For more information, Visit Here:- https://www.corpzo.com/