Common Mistakes While Filing ITR in India and How to Avoid Them

Quick answer

The most common ITR filing mistakes are choosing the wrong ITR form, ignoring AIS or Form 26AS, claiming TDS without reporting related income, missing interest or capital gains, selecting the wrong tax regime, claiming unsupported deductions, not disclosing foreign assets, using wrong bank details, not e-verifying the return and ignoring notices after filing.

Some mistakes only delay refunds. Some create demand. Some can make the return defective.

Official reference: Income Tax Department e-Proceeding FAQs.

Mistake 1. Selecting the wrong ITR form

Wrong form selection is a basic but serious error.

Examples:

Read Which ITR Form Is Applicable? before choosing the form.

Mistake 2. Claiming TDS but not reporting the income

This is one of the clearest mismatch triggers.

The Income Tax Department lists this as a common defective-return error: credit for TDS is claimed but the corresponding receipts or income are not offered for taxation.

A taxpayer sees TDS on professional fees in Form 26AS and claims the TDS credit, but forgets to report the professional receipts. The department can question the mismatch because the tax credit and income do not match.

Mistake 3. Ignoring AIS and TIS

AIS and TIS may show:

• salary
• interest
• dividends
• securities transactions
• mutual fund transactions
• property transactions
• TDS and TCS
• SFT information
• GST-related information in some cases
• foreign remittance or other reported transactions

Ignoring these records is risky. If the return shows lower income than third-party reported data, the taxpayer may receive a mismatch communication, demand, defective notice or scrutiny risk depending on facts.

Mistake 4. Reporting gross receipts incorrectly

The department also lists a mismatch where gross receipts shown in Form 26AS or AIS, on which TDS credit is claimed, are higher than the total receipts shown under all income heads in the return.

This often happens with:

• professional receipts
• commission income
• contract income
• rent
• interest
• brokerage
• freelancing income
• business receipts booked net of expenses instead of gross where gross reporting is required

Business and professional taxpayers should reconcile books, GST returns where applicable, bank receipts, Form 26AS and AIS before filing.

Mistake 5. Forgetting savings interest, FD interest and dividend income

Small amounts are still income.

Common omissions include:

• savings account interest
• fixed deposit interest
• recurring deposit interest
• bond interest
• income tax refund interest
• dividend income
• family pension

Banks and companies may report these amounts. If they are missed, the return may not match AIS.

Mistake 6. Wrong house property reporting

Mistakes include:

• not reporting rental income
• claiming wrong municipal taxes
• claiming housing loan interest without checking limits and conditions
• not separating self-occupied and let-out properties correctly
• ignoring unrealised rent rules where applicable
• not matching Form 16 house property loss with return schedules

For complex rental or loan cases, professional review is safer.

Mistake 7. Capital gains not computed properly

Capital gain mistakes are common in shares, mutual funds, property and virtual digital assets.

Check:

• purchase date
• sale date
• cost of acquisition
• indexation where applicable
• STT status
• grandfathering where relevant
• section 112A reporting
• broker statement versus AIS
• multiple demat accounts
• losses to be carried forward
• virtual digital asset reporting

If capital gains exist outside the limited permitted scope of ITR-1 or ITR-4, the taxpayer may need ITR-2 or ITR-3 depending on business income.

Mistake 8. Unsupported or wrong deduction claims

Do not claim deductions merely because a number appears attractive.

Check evidence for:

• section 80C investments
• NPS
• medical insurance
• donations
• education loan interest
• disability-related deductions
• housing loan principal and interest
• employer deductions already considered in Form 16

Some deductions require specific forms or details before filing. For example, the official ITR-4 FAQs state that Form 10-IA is required before filing if deduction under sections 80DD or 80U is claimed.

Mistake 9. Selecting the wrong tax regime

The tax regime can materially change the result.

Before filing, compare old and new regime based on actual deductions, exemptions and income structure. Business taxpayers should be particularly careful because regime selection may require additional procedural compliance.

Use calculation tools only as guidance. Final filing must be based on applicable law and facts.

Mistake 10. Not filing return of loss on time

Loss carry-forward is not automatic in every case.

The Income Tax Department's ITR FAQs state that filing return of loss within the due date remains a prerequisite for carry-forward of certain losses, including business loss, racehorse activity loss and capital loss.

This matters for traders, investors, businesses and professionals who want to carry forward losses.

Mistake 11. Not disclosing foreign assets or foreign income

Foreign assets and foreign income require careful reporting.

This may apply to:

• foreign bank accounts
• foreign shares
• ESOPs of foreign companies
• foreign retirement accounts
• foreign signing authority
• foreign income
• overseas investments

Resident taxpayers with foreign assets should not treat this casually. Non-disclosure can have serious consequences.

Mistake 12. Not completing balance sheet and profit and loss details where required

The Income Tax Department lists as a common defective-return error: taxpayers have income under Profits and Gains of Business or Profession but have not filled Balance Sheet and Profit and Loss Account.

This is common in business/professional returns where the taxpayer enters profit but ignores schedules.

For business taxpayers, see Accounting & Bookkeeping, Tally Customisation, and Internal Audit.

Mistake 13. Wrong bank account or refund account problem

Refund failures may happen because:

• bank account is not pre-validated
• name in bank does not match PAN records
• account is closed
• wrong IFSC is used
• refund is not nominated to the correct account

Before filing, verify bank account status on the portal.

Mistake 14. Not e-verifying the return

Submitting the return is not enough. Verification is mandatory.

The official ITR-4 manual states that if the taxpayer chooses to e-verify later, verification must be completed within 30 days of filing. If ITR-V mode is selected, signed ITR-V must be sent to CPC, Bengaluru within the prescribed time.

An unverified return can become a serious filing defect.

Mistake 15. Ignoring defective-return notice or demand

After filing, check the e-filing portal and email/SMS notifications.

If a notice is received, review:

• section mentioned
• assessment year
• reason
• mismatch
• response deadline
• documents required
• whether revision, rectification or response is appropriate

Do not ignore portal notices.

Practical ITR mistake checklist

Internal links

Useful pages:

• How to File Income Tax Return in India
• Which ITR Form Is Applicable?
• Taxation Support
• TDS Estimator
• Tax Calendar
• Accounting & Bookkeeping

FAQ

Can I revise my ITR if I made a mistake?

For AY 2026-27, the Income Tax Department states that revised return is governed by the Income-tax Act, 1961. A revised return can be filed within the permitted time limit or before completion of assessment, whichever is earlier.

What is a defective return?

A defective return is a return with specified defects, such as missing schedules, inconsistent information, missing income against TDS claim or other errors. If a defective-return notice is received, respond within the time allowed.

Is AIS always correct?

AIS is very useful, but it can contain incorrect or duplicated information. It should be reviewed and reconciled, not blindly copied.

What if TDS is shown but I did not receive the income?

Do not blindly claim or ignore it. Reconcile with the deductor, bank statement, books and AIS. The correct treatment depends on facts.

Can wrong ITR form be corrected?

Depending on timing and facts, a revised return may be possible. However, it is better to choose the correct form before filing.

This article is for educational purposes only. Tax treatment depends on facts, documents and current law. Verify the official portal and take professional advice where needed.