Top 10 Mistakes That Can Get You an Income Tax Notice in 2025

Filing your Income Tax Return (ITR) can seem straightforward, but several common mistakes can lead to delays in processing, penalties, or even tax audits. Whether you’re filing for the first time or have experience, understanding the nuances of the process is essential for ensuring accurate and timely submissions. This section highlights some of the most common mistakes taxpayers make while filing their ITR and offers tips on how to avoid them. By recognizing these errors early, you can ensure a smoother tax filing experience, minimize delays, and reduce the risk of unnecessary scrutiny from tax authorities.

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Table of Contents

• Incorrect or Mismatched Personal Details

• Choosing the Wrong ITR Form

• Failing to Report All Sources of Income

• Mismatch Between Form 16 and AIS/Form 26AS

• Incorrect Income Calculations or Not Including Exempt Income

• Claiming Ineligible or Excess Deductions

• Late Filing or Failure to File ITR

• Not Verifying the ITR After Filing

• Not Maintaining or Providing Proper Documents for Audit

• Ignoring TDS Credit Reconciliation

• Conclusion

• FAQs

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Incorrect or Mismatched Personal Details

One of the most common mistakes when filing ITR is providing incorrect or mismatched personal details such as the name, address, or PAN (Permanent Account Number). This mismatch can cause the Income Tax Department to reject your return, requiring you to resubmit it with the correct details. Ensuring your details are accurately entered is crucial to avoid delays in processing and to prevent issues with refunds or communication with tax authorities. Always double-check the personal information on your ITR form against your supporting documents, such as your PAN card and Aadhaar.

Choosing the Wrong ITR Form

Choosing the correct ITR form is critical for the accuracy and validity of your filing. Different ITR forms apply to different categories of taxpayers, such as salaried individuals, business owners, and those with capital gains or rental income. Filing the wrong form can lead to a delayed filing or even rejection. For example, individuals with income from salary and other sources should file ITR-1, while those with income from business or profession need to file ITR-3 or ITR-4. Be sure to review the eligibility criteria for each form and choose the one that best applies to your income sources and tax situation.

Failing to Report All Sources of Income

A common mistake made by many taxpayers is failing to report all sources of income. Whether it’s freelance income, rental income, interest from savings, or capital gains, all income needs to be disclosed. Underreporting income can lead to penalties and interest on unpaid taxes. It’s essential to include income from all sources to avoid discrepancies and ensure that the tax return is accurate. If you receive income from multiple sources, make sure you have detailed records for each and include them all in your return.

Mismatch Between Form 16 and AIS/Form 26AS

Form 16 is issued by your employer and shows the details of your salary, TDS (Tax Deducted at Source), and other deductions. Similarly, AIS (Annual Information Statement) and Form 26AS show the TDS deductions reported by banks, employers, and other institutions. A mismatch between Form 16 and the TDS details in AIS/Form 26AS can lead to discrepancies in your filed return. This is one of the most common reasons for tax returns being delayed or flagged for audit. Before filing, ensure that all details match across the forms to avoid delays or complications.

Incorrect Income Calculations or Not Including Exempt Income

It’s essential to calculate your income correctly, including accounting for exemptions and deductions. Mistakes in income calculations or failing to include exempt income—such as agricultural income or interest on tax-free bonds—can lead to a mismatch in tax calculations. If exempt income is not included, the tax authorities might consider it as underreporting, leading to penalties. Always ensure that your income is calculated accurately, and remember to include any exempt income when filing your return.

Claiming Ineligible or Excess Deductions

Many taxpayers mistakenly claim deductions for which they are not eligible, or they may claim more than the permissible amount. Common examples include deductions under Section 80C (like life insurance premiums, PPF, or ELSS) orSection 80D(for health insurance premiums). Incorrectly claiming deductions can lead to higher-than-necessary tax liability or an inaccurate return, which may be flagged during processing. Always verify the eligibility of deductions before claiming them, and ensure you do not exceed the limits set by the tax laws.

Late Filing or Failure to File ITR

Failing to file your ITR by the deadline, or filing it late, can result in penalties and interest on the unpaid tax. The penalties for late filing depend on when the return is filed—if you miss the deadline, you can file a belated return, but penalties and interest will apply. For FY 2024-25 (Assessment Year 2025-26), the deadline has been extended, but it’s still essential to file as early as possible to avoid late fees and ensure faster processing of refunds.

Not Verifying the ITR After Filing

One common oversight is not verifying the ITR after submission. After submitting your tax return online, you must verify it through one of the available methods: Aadhaar OTP, net banking, or physical verification through a signed copy. Failure to verify your return can lead to it being considered invalid, causing delays in processing, and possibly forfeiting your refund. Always make sure that your return is verified promptly to complete the filing process.

Not Maintaining or Providing Proper Documents for Audit

If your return is selected for audit, you will need to provide various documents to support your claims, such as income details, TDS certificates, investment proof, and more. Failing to maintain or submit the necessary documents can lead to penalties or further scrutiny. It’s important to maintain proper records for all the claims made in your return, whether they’re related to income, deductions, or exemptions, and to have them readily available in case of an audit.

Ignoring TDS Credit Reconciliation

TDS (Tax Deducted at Source) is one of the most common tax deductions, and it’s essential to ensure that the TDS reported in your Form 26AS or AIS is accurately reflected in your return. Failure to reconcile TDS credits properly can lead to a mismatch and delay the processing of your refund. Always check your TDS credits before filing and ensure they align with the details provided in your Form 26AS and other TDS certificates.

Conclusion

Filing your Income Tax Return accurately and on time is crucial to avoid penalties, delays, and potential audits. By being aware of these common mistakes—such as mismatched personal details, choosing the wrong form, underreporting income, or claiming ineligible deductions—you can ensure a smoother filing process and prevent unnecessary complications. Tax filing may seem complex, but by staying organized and thorough, you can avoid errors and make the process as efficient as possible. If you need help with tax filing, platforms likeTaxBuddy provide the tools and professional assistance to ensure your return is filed accurately and on time, reducing the chances of errors and delays. For anyone looking for assistance in tax filing, it is highly recommended to download theTaxBuddy mobile app for a simplified, secure, and hassle-free experience.

FAQs

Q1: What should I do if my personal details are incorrect in the ITR?

If your personal details, such as your name, date of birth, or address, are incorrect in your ITR, you must correct them before submission to avoid rejection or delays. Check these details against supporting documents like your PAN card, Aadhaar card, or passport. If there's an error in your PAN details, you can update it on the official Income Tax portal. For Aadhaar discrepancies, you can update your details through the Aadhaar website. Ensuring the accuracy of personal details is crucial to the success of your filing and to avoid complications in processing your return.

Q2: How do I choose the correct ITR form?

Choosing the correct ITR form depends on the sources of your income. There are several ITR forms, and each is designed for specific types of taxpayers. For example:

• ITR-1 is for salaried individuals with income from salary, house property, and other sources.
  

• ITR-2 is for individuals with income from more than one house property or capital gains.
  

• ITR-3 is for individuals who have income from business or profession.
  

• ITR-4 is for taxpayers opting for the presumptive taxation scheme under sections 44AD, 44ADA, or 44AE.
  

Carefully read the eligibility criteria for each form to ensure you select the correct one. Filing with the wrong form can lead to errors, penalties, or delays in processing.

Q3: Can I file an ITR after missing the deadline?

Yes, if you miss the filing deadline, you can still file a belated return before December 31, 2025 for the Financial Year 2024-25 (Assessment Year 2025-26). However, there are consequences:

• Penalties: A penalty of up to ₹5,000 may apply.

• Interest: Interest on unpaid taxes is charged under sections 234A, 234B, and234C.

• Delay in Refund: Filing late can delay your refund, as the Income Tax Department processes on a first-come, first-served basis.

It’s important to file as soon as possible to minimize penalties and delays.

Q4: What should I do if there’s a mismatch in TDS details?

A mismatch in TDS (Tax Deducted at Source) details can delay your tax return processing and refund. To address this:

• Check Form 26AS or AIS: These forms show the TDS deductions made against your PAN.

• Verify with the Deductor: If the TDS details in your return don’t match the TDS statements, contact the deductor (employer or bank) to correct the mismatch.

• File TDS Correction: Once the correction is made, you can file your ITR again with the updated details.

Ensuring that your TDS details are correct is crucial for timely processing and avoiding discrepancies in your filing.

Q5: What if I claim deductions that I'm not eligible for?

Claiming deductions that you're not eligible for can result in penalties, interest, or even tax scrutiny. Common deductions include those under sections like 80C (life insurance, PPF), 80D (health insurance premiums), and 80E (education loan interest). To avoid issues:

• Check Eligibility: Ensure you meet the criteria before claiming deductions.

• Review Documents: Ensure you have supporting documents for every deduction, such as receipts or proofs of payment.

• Avoid Over-Claiming: Double-check the amount you're claiming to ensure it aligns with the permissible limits.

If you incorrectly claim a deduction, you may have to pay back the excess amount with interest, along with penalties.

Q6: How can I track my income tax refund status?

To track your income tax refund status:

• Visit the official Income Tax Department portal.

• Use your PAN and the relevant assessment year to check the status.

• Alternatively, you can check through the Tax Information Network (TIN) or use the Refund Status tool on the official portal.

Tracking your refund helps you stay updated on when to expect it, and if there’s any delay, you can take action accordingly.

Q7: What happens if I fail to file ITR on time?

If you miss the deadline for filing your ITR, you can file a belated return but will incur penalties and interest. The consequences are:

• Penalties: A penalty of up to ₹5,000 may be charged depending on how late you file.

• Interest: Interest under sections 234A, 234B, and 234C will be levied on any unpaid taxes.

• Delayed Refund: If you're entitled to a refund, late filing can delay the refund process.

Filing your return on time ensures you avoid additional costs and expedite the refund process.

Q8: Is it necessary to verify the ITR after filing?

Yes, verifying your ITR is an essential step after filing. If you don't verify your return, it will be considered invalid, and it will not be processed. You can verify your ITR via:

• E-verification: Using OTP sent to your registered mobile number or email linked with your Aadhaar.

• Aadhaar-based e-verification: Using the Aadhaar OTP method.

• EVC (Electronic Verification Code): Via Net Banking or using the bank account linked with the Income Tax Department.

Verification confirms that you’ve filed the return accurately and are ready for further processing.

Q9: How long do I need to keep documents for tax purposes?

For tax-related purposes, you must keep documents like income proofs, investment receipts, TDS certificates, and deduction proofs for at least 6 years. The Income Tax Department can scrutinize your returns or request these documents in case of a tax audit or reassessment. These records are important for validating your tax filings in case of any future inquiries or disputes.

Q10: Can TaxBuddy help me with tax filing?

Yes, TaxBuddy offers both self-filing and expert-assisted options to help with your ITR filing. TaxBuddy’s self-filing tools are ideal for individuals who are comfortable with tax filings but still want a simplified process. For those needing additional support, expert-assisted plans provide guidance from experienced tax professionals to ensure your return is accurate and compliant. TaxBuddy also provides personalized reminders, alerts, and assistance throughout the entire process, ensuring a smooth and hassle-free tax filing experience.

Q11: Can I make corrections in my ITR after filing?

Yes, if you realize that there’s an error in your filed ITR, you can file a revised return under section 139(5). This can be done before the end of the assessment year. You need to correct the mistake and submit the revised return, and the Income Tax Department will process the updated filing. This is essential for rectifying errors like wrong income, TDS mismatches, or missed deductions.

Q12: Does TaxBuddy support all tax regimes for ITR filing?

Yes, TaxBuddy supports both the old tax regime and the new tax regime. TaxBuddy’s platform helps you assess your financial situation and choose the best tax regime that maximizes your savings. Whether you want to claim exemptions under the old regime or opt for the lower tax rates under the new regime, TaxBuddy will guide you through the process, ensuring that you file your ITR in the most tax-efficient manner.