Income Tax Return filing looks straightforward until a notice arrives. Most notices are triggered by avoidable mistakes — the wrong form, ignored AIS entries, or deductions claimed without proof. Here are the seven we see most often.
1. Choosing the wrong ITR form
Salaried individuals file ITR-1, but the moment you have business income, capital gains above the basic exemption, or foreign assets, ITR-1 is no longer valid. Filing the wrong form means your return is treated as defective under Section 139(9).
2. Ignoring AIS and TIS mismatches
The Annual Information Statement captures transactions reported by banks, brokers and other entities. If your return does not match the AIS, the system flags it automatically. Always reconcile your AIS before filing.
3. Claiming deductions without documentation
Section 80C, 80D and other deductions require proof — investment receipts, premium certificates, donation receipts. Claiming deductions you cannot substantiate invites scrutiny.
4. Not reporting all bank accounts
All operative bank accounts must be reported in the ITR. Omitting accounts — especially those with high balances — is a common flag.
5. Missing the due date
Late filing under Section 234A attracts a fee of up to Rs. 5,000 (Rs. 1,000 for small taxpayers) plus interest. File on time, even if you are unsure — a revised return can fix errors later.
6. Incorrect capital gains reporting
Equity, mutual fund and property sales each have specific reporting requirements. Cost must be indexed for long-term capital gains, and Securities Transaction Tax details must be reported correctly.
7. Forgetting to verify the return
An unverified return is treated as invalid. You must e-verify within 30 days of filing, or send a signed ITR-V to CPC Bangalore.
Most filing mistakes are preventable with a careful review before submission. Reconcile your AIS, pick the right form, keep your proof, and verify on time. If you receive a notice, respond promptly rather than ignoring it.
