ITR Filing Mistakes: 9 Common Errors That Delay Refunds and Create Tax Notices

Filing your Income Tax Return correctly matters for two practical reasons. A clean, accurate filing protects you from unnecessary notices and scrutiny. It also gets your refund — if you are owed one — processed faster.

The nine mistakes covered here are the ones that appear most consistently in ITR-related notices, refund delays, and calls to tax professionals in the weeks after the filing deadline. Most are avoidable with a small amount of attention before you submit.

Mistake 1: Filing the wrong ITR form

India's ITR forms are not interchangeable. Choosing the wrong form is one of the most common — and most consequential — filing errors.

The main forms used by individual taxpayers:

A salaried employee who also sold mutual funds or stocks during the year cannot use ITR-1 — they need ITR-2 because of capital gains. Filing ITR-1 in that situation means omitting mandatory disclosures, which can result in a defective return notice.

Check the eligibility criteria on the Income Tax Department's e-filing portal (incometax.gov.in) before starting your filing. The form selector tool helps identify the correct form.

Mistake 2: Not checking AIS and Form 26AS before filing

The Annual Information Statement (AIS) is your most important pre-filing reference document. It aggregates all financial transactions reported to the Income Tax Department on your behalf by third parties — banks, employers, mutual fund companies, brokers, property registrars, and others.

Form 26AS is the tax credit statement showing tax deducted at source (TDS) on your behalf by various entities.

The critical process: Before entering any income in your return, download and review your AIS and Form 26AS from the Income Tax Department portal. Cross-check the data there with your own records.

Common discrepancies to look for:

• Interest income from savings accounts and FDs that you may have forgotten or not tracked
• Dividends from mutual funds or stocks
• Capital gains reported by brokers or fund houses
• TDS deducted by banks (on FD interest) or other entities
• Income from previous employer if you changed jobs during the year

If your AIS shows income you have not declared, the IT Department already has that information. Not declaring it in your return creates a mismatch that can trigger a notice.

If AIS shows incorrect information, you can raise a feedback through the AIS portal. Keep documentation supporting your correction.

Getting your deductions right is the prerequisite to avoiding most income-related notices. The income tax deductions guide explains what each deduction requires as documentation before you claim it.

Mistake 3: Missing income from bank interest

Bank savings account interest and FD interest are taxable under the head "Income from Other Sources." Many taxpayers either forget this or assume banks deduct sufficient TDS to cover it.

Banks deduct TDS on FD interest only when annual interest from a single bank exceeds ₹40,000 (₹50,000 for senior citizens — verify current thresholds). If your FD interest from a bank is below this threshold, no TDS is deducted — but the interest is still fully taxable and must be reported in your return.

This means:

• A ₹5 lakh FD earning 6.5% generates ₹32,500 of interest — below the TDS threshold, so no TDS is cut, but the income is taxable
• Savings account interest is also taxable (above the Section 80TTA limit of ₹10,000 for non-senior citizens — verify current limits)

Most people have FD interest across multiple banks, savings account interest, and potentially interest from PPF maturity proceeds (PPF interest is exempt — but the distinction matters). Consolidating all interest income and reporting it correctly prevents a common AIS mismatch.

Mistake 4: Not reporting income from all employers

If you changed jobs during a financial year, you have income from two employers. Both employers are required to deduct TDS based on their portion of your income — but neither employer knows about the income from the other.

This creates a near-universal shortfall: your total annual income from both employers combined pushes you into a higher tax bracket or higher slab, but each employer calculated TDS only on their portion. The combined TDS is insufficient.

The practical fix: Inform your second employer about income from your first employer at the time of joining. Provide Form 16 from the first employer. The second employer can then adjust TDS accordingly. Many people either forget this or do not know it is required.

At filing time, both sources of salary must be declared. The total income determines the actual tax, and any difference between TDS already deducted and actual tax owed becomes a tax demand.

Mistake 5: Ignoring capital gains from mutual funds and stocks

Capital gains from the sale of equity mutual fund units, stocks, debt funds, or any other capital asset must be reported in the ITR. This requires ITR-2 (not ITR-1).

Common scenarios where people miss this:

• Redeemed a mutual fund SIP after 3 years — the redemption created long-term or short-term capital gains depending on holding period
• Switched between mutual fund schemes within the same AMC — even inter-scheme switches are treated as redemption and reinvestment, creating capital gains
• Received dividend reinvestment in mutual funds prior to the dividend taxation change — check your history
• Sold any property, gold, or other capital asset during the year

Brokers and mutual fund platforms provide capital gains statements annually. These are also reflected in AIS. Review your capital gains statement from each platform carefully before filing.

Both long-term and short-term capital gains must be reported. Tax rates differ by asset type and holding period — verify current rates at incometax.gov.in.

Mistake 6: Claiming deductions without genuine documentation

Section 80C, 80D, and other deductions must correspond to actual transactions that happened during the financial year. Claiming a deduction without a genuine underlying investment or expense — and without documentation — is a reporting error with consequences.

Specific situations to be careful about:

Inflated HRA claim: Rent receipts must correspond to actual rent paid via bank transfer or documented cash. The landlord must be a real person (not a close relative in a tax-avoidance arrangement), and the rent must be genuinely paid and taxable in the landlord's hands.

Section 80C without actual investment: Claiming 80C deductions for investments you did not make — or claiming the same investment twice — is a clear filing error. The AIS and third-party reporting often flags these.

80D claim without premium payment: Health insurance premium must have been paid in the financial year being claimed, in non-cash mode, and the policy must be in force.

Claim only what you have genuinely invested, paid, or incurred. Keep all receipts and certificates. A CA review of your deduction claims once a year is worthwhile if you have multiple deductions across categories.

Mistake 7: Entering the wrong bank account for refund

If your return shows a refund due, the refund is issued by the Income Tax Department via direct bank transfer to the account you specify in your return.

If you enter an incorrect IFSC code, wrong account number, or a bank account that is closed or inactive, the refund transfer fails. The refund then requires a re-issue request, extending the timeline by weeks or months.

Before filing:

• Verify your primary bank account's IFSC code and account number directly from a recent bank statement or passbook
• Ensure the bank account is active and linked to your PAN
• The account must be pre-validated in the IT portal (pre-validate under the bank account section before filing)

Most refund delays that people experience are caused by bank account errors that are easily preventable at the time of filing.

Mistake 8: Filing late without tracking the consequences

The annual ITR filing deadline is typically July 31 for individuals who do not have business or professional income requiring audit. (Extended deadlines are sometimes announced by the IT Department — check the official portal for current due dates.)

Filing after the deadline (but before a later allowed date) attracts a late filing fee under Section 234F. The fee is tiered based on income — verify current amounts at incometax.gov.in.

Beyond the fee, late filing has a less-known consequence: the inability to carry forward certain losses. Specifically, losses under "Capital Gains" that can ordinarily be carried forward and set off against future capital gains in subsequent years cannot be carried forward if the return is filed after the due date.

If you have capital losses in the year, filing on time is particularly important.

Mistake 9: Not verifying the return after filing

Filing your ITR is not complete until you verify it. An ITR filed but not verified is treated as not filed.

Verification methods:

• e-Verify online (Aadhaar OTP, net banking, bank account-based OTP, DEMAT account) — fastest and easiest for most people
• Physical verification by sending signed ITR-V (the acknowledgement form) to CPC Bengaluru by ordinary post within 30 days of filing

Many people file correctly but forget to verify. The return sits unverified, the assessment is not processed, and the refund is not issued. If you use a CA to file, confirm with them that verification was completed.

Check your filing status on the Income Tax portal under the "e-File" section to confirm both filing and verification are complete.

For the year-round habits that make filing easier — keeping documentation organized, choosing the right regime, making advance tax payments — the tax planning in India guide covers the full approach.

When to seek professional help

Not every ITR filing requires professional assistance. But these situations typically benefit from a CA:

• Multiple income sources including business, freelance, capital gains, and salary
• Foreign income, foreign bank accounts, or foreign assets
• Significant capital gains from property, equity, or business sale
• Any prior outstanding demand or notice from the Income Tax Department
• First-time filing with complex income
• Significant business with GST registration

The cost of a qualified CA for ITR filing is modest relative to the cost of errors, notices, or missed refunds that come from incorrect filing. The Income Tax Department's e-filing portal (incometax.gov.in) provides step-by-step guidance for self-filers and useful tools including the AIS, Form 26AS, and pre-filled returns.

Mistake 10: Not Reporting Exempt Income That Still Needs Disclosure

A common misconception: exempt income doesn't need to be reported. While exempt income is not taxed, it often still needs to be disclosed in the ITR.

Examples:

• LTCG below ₹1.25 lakh from equity: Tax is zero, but the gain still needs to be entered in Schedule CG. Many filers skip this, creating a mismatch with broker-reported data in AIS.
• PPF interest: Fully exempt, but if your AIS shows PPF interest as reported by the post office or bank, and you don't declare it with an exempt marker, the system may flag it as undisclosed income.
• Agricultural income above ₹5,000: Exempt from tax but must be disclosed. It also affects the surcharge/tax computation through the "partial integration" method where agricultural income is added to other income for rate determination.
• Long-term capital gain on equity MF below exemption limit: If your LTCG is ₹80,000 (entirely within ₹1.25L exemption), you still report it in Schedule CG with the exemption applied — the return shows ₹0 taxable LTCG, not an absent entry.

The rule of thumb: if AIS shows a transaction or income amount, report it in your ITR even if the tax is zero. Mark it as exempt where appropriate. This prevents mismatches that generate unnecessary notices.

Disclaimer: This article is for educational purposes only. Income tax rules, due dates, penalties, and filing requirements change with each Finance Act and government notification. This article reflects general understanding as of the time of writing and may not reflect the most current rules. This does not constitute personalized tax advice. For filing requirements specific to your income and situation, consult a qualified Chartered Accountant. All authoritative and current tax rules are available at incometax.gov.in.

Disclosure: This article is educational in nature. No specific tax filing service, software, or financial product is being recommended.