Mistakes to Avoid When Choosing the Right ITR Form
- PRITI SIRDESHMUKH
- Oct 4
- 8 min read
Choosing the correct ITR form is crucial to avoid defective returns, penalties, and delays in refunds. Many taxpayers make the mistake of filing an incorrect form or failing to disclose all sources of income and bank accounts. With the AY 2025-26 deadlines approaching, ensuring accurate form selection, reconciling income with official statements, and reporting all active bank accounts is more important than ever. Leveraging digital solutions like TaxBuddy can simplify this process, help verify eligibility, and prevent common filing mistakes, making tax compliance straightforward and stress-free.
Table of Contents
Common Mistakes in Selecting the Correct ITR Form
One of the most frequent errors taxpayers encounter while filing their Income Tax Return (ITR) is selecting the incorrect ITR form. The Income Tax Department provides multiple ITR forms, such as ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, and others, each designed for specific categories of taxpayers based on income sources, type of business or profession, and residential status. For instance, ITR-1 is primarily for salaried individuals with income from salary, pension, or a single house property, while ITR-2 is applicable for individuals with income from multiple house properties, capital gains, or foreign assets. ITR-3 and ITR-4 cater to individuals or professionals running a business or profession, with ITR-4 specifically designed for taxpayers opting for the presumptive taxation scheme.
Selecting the wrong form can lead to rejection of the filed return, delays in processing, and issuance of notices from the Income Tax Department for correction. It may also affect refund processing, as mismatched forms can trigger scrutiny or additional verification. Therefore, understanding the eligibility criteria for each ITR form is essential. Taxpayers should carefully review their income sources, business involvement, and other relevant factors before choosing the appropriate form. Consulting online guidance or using platforms like TaxBuddy can help ensure accurate selection, reduce errors, and facilitate smooth return processing.
Reporting All Sources of Income Accurately
Taxpayers must report all income sources, including salary, business profits, capital gains, interest, rental income, and other sources. Failure to declare any income, even inadvertently, may attract penalties and interest. Proper documentation, such as Form 16, bank statements, and capital gains statements, helps ensure accurate reporting.
Reconciling Income with AIS and Form 26AS
Reconciling income with the Annual Information Statement (AIS) and Form 26AS is a crucial step in ensuring accurate Income Tax Return (ITR) filing. The AIS and Form 26AS serve as comprehensive records maintained by the Income Tax Department, summarizing a taxpayer’s income, Tax Deducted at Source (TDS) credits, advance tax payments, and other tax-related transactions for a given financial year. By comparing the income reported in the ITR with the figures mentioned in these statements, taxpayers can identify discrepancies such as missing TDS credits, unreported interest income, or incorrect deductions claimed by employers or financial institutions.
Cross-checking against AIS and Form 26AS helps prevent errors that could lead to delayed refunds or trigger scrutiny or notices from the tax authorities. For example, if a TDS credit is recorded in Form 26AS but not reflected in the ITR, the refund may be delayed until the discrepancy is resolved. Taxpayers should verify each source of income, ensure all TDS credits are accounted for, and confirm that deductions claimed are supported by proper documentation before submitting the return. Regular reconciliation not only streamlines the filing process but also ensures compliance and reduces the likelihood of disputes with the Income Tax Department.
Bank Account Disclosure Requirements in ITR
Providing accurate bank account details is essential for receiving refunds. Taxpayers must ensure that all primary accounts are declared correctly in the ITR form. Any errors in account numbers, IFSC codes, or inactive accounts may result in refund delays or rejections.
Avoiding Prefilled Data Errors and Other Common Pitfalls
Prefilled ITR data is designed to make the filing process quicker and easier by automatically populating certain details such as personal information, salary, TDS credits, and bank account details. While this feature saves time, it can also be a source of errors if not carefully reviewed. Common mistakes in prefilled data include incorrect TDS credits, which may arise if the employer or deductor has reported inaccurate information or if multiple TDS certificates are involved. Mismatched PANs are another issue, especially when multiple accounts, investments, or transactions are linked to different PANs. Outdated personal information, such as changes in address, contact numbers, or bank account details, can also cause discrepancies and delays in processing refunds.
To avoid these pitfalls, taxpayers should meticulously cross-check all prefilled details against their actual documents before submitting the return. This includes verifying computation of taxable income, confirming that deductions and exemptions have been correctly applied, ensuring that all income sources are included, and reviewing any incomplete disclosures. Failure to correct these errors may lead to notices, delays in refund processing, or even penalties. Careful verification ensures accurate filing and reduces the risk of post-filing corrections.
Understanding ITR Eligibility: Old vs New Tax Regime
Choosing the correct ITR form depends significantly on the taxpayer’s chosen tax regime, whether the old regime or the new regime under Section 115BAC. Each regime has its specific rules, benefits, and eligibility criteria. The old tax regime allows taxpayers to claim various deductions and exemptions, such as deductions under Section 80C for investments in provident funds, insurance premiums, and tax-saving fixed deposits, Section 80D for health insurance premiums, and exemptions like House Rent Allowance (HRA). These benefits reduce taxable income and can significantly lower tax liability.
In contrast, the new tax regime offers lower tax rates but removes most deductions and exemptions. Taxpayers opting for the new regime cannot claim benefits under Sections 80C, 80D, or HRA, among others. Therefore, understanding which regime a taxpayer qualifies for and which provides the maximum tax advantage is crucial for selecting the correct ITR form. Accurate understanding ensures proper filing, maximizes eligible deductions, and minimizes the risk of errors or notices from the Income Tax Department.
Latest Updates and Filing Deadlines for AY 2025-26
For the Financial Year 2024-25, corresponding to Assessment Year 2025-26, the Income Tax Department has revised the ITR filing deadlines to provide taxpayers with additional time for accurate compliance. Individuals and non-audit assessees now have until September 15, 2025, to submit their returns. This extension offers relief to salaried individuals, pensioners, and other taxpayers who do not require a statutory audit of their accounts, allowing them to review their income, deductions, and TDS credits thoroughly before filing. Businesses that are required to undergo a statutory audit have a later deadline of October 31, 2025. Companies or entities with transfer pricing obligations, due to international or domestic transactions, have an extended filing window up to November 30, 2025. Taxpayers who miss these deadlines can still file belated returns until December 31, 2025; however, they may be liable to pay penalties and interest on any tax due. Timely awareness of these deadlines is critical, as delays can lead to unnecessary financial liabilities, interest charges, or postponements in receiving refunds.
How TaxBuddy Helps Prevent Filing Mistakes
TaxBuddy plays a crucial role in helping taxpayers navigate these deadlines and avoid common mistakes during the filing process. The platform offers an intuitive, AI-driven interface that guides users through every step of filing their ITR accurately. It assists in selecting the correct ITR form based on the taxpayer’s profile, automatically verifies TDS credits reflected in Form 26AS, and allows for a thorough review of prefilled data to ensure completeness. The platform also facilitates reconciliation of income from multiple sources, including salary, capital gains, interest, and other income, while accounting for eligible deductions and exemptions. By consolidating all these details in a single workflow, TaxBuddy significantly reduces the likelihood of errors that could lead to notices or delayed refunds. Taxpayers can choose between self-filing and expert-assisted plans, making it easier to comply with deadlines confidently. This comprehensive approach ensures a smoother, error-free filing experience, timely processing of refunds, and peace of mind for taxpayers during the ITR filing season.
Conclusion
Accurate ITR filing requires careful attention to form selection, income reporting, reconciliation with AIS and Form 26AS, and correct bank account details. Leveraging platforms like TaxBuddy ensures a smooth filing experience while minimizing errors and potential compliance issues. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides both options. Users can choose self-filing if they prefer a hands-on approach, with guided steps, prefilled details, and AI-driven error checks. For those seeking professional help, expert-assisted plans allow certified tax professionals to review, prepare, and file returns, ensuring accuracy and compliance. Both options are designed to simplify ITR filing for FY 2024-25.
Q2. Which is the best site to file ITR?
The best site combines security, ease-of-use, and accuracy. TaxBuddy stands out as a secure online platform for filing ITR, offering prefilled data, automated calculations, and options for self-filing or expert assistance. It is optimized for the latest ITR forms and ensures timely compliance with updated deadlines.
Q3. Where to file an income tax return?
ITRs can be filed through the Income Tax Department’s e-filing portal or via trusted platforms like TaxBuddy. Using such platforms ensures prefilled information, automated error checks, and smooth submission directly to the Income Tax Department.
Q4. Can I file a revised return if I make a mistake after submission?
Yes. If you discover an error after filing, you can submit a revised return using the original ITR form within the stipulated period (generally before the end of the relevant assessment year or within 2 years from the original filing, as per Section 139(5)). Platforms like TaxBuddy guide users through the process step-by-step.
Q5. How do I reconcile my income with AIS and Form 26AS?
AIS (Annual Information Statement) and Form 26AS provide a summary of your income, TDS, and tax credits. Reconciliation involves matching your salary, bank interest, capital gains, and TDS with the data in AIS/26AS. TaxBuddy automatically highlights mismatches and helps correct entries before filing to avoid processing delays.
Q6. What happens if I choose the wrong ITR form?
Selecting the wrong ITR form can lead to rejection of your return, inaccurate tax calculation, or notices from the IT Department. TaxBuddy automatically suggests the correct ITR form based on income sources and financial details, minimizing errors.
Q7. Are prefilled details in the ITR form always accurate?
Prefilled details are based on data submitted by employers, banks, and other entities. While usually accurate, mismatches can occur due to missing TDS entries or reporting errors. TaxBuddy cross-checks prefilled information against Form 26AS and other sources to ensure accuracy before submission.
Q8. Do I need to disclose all bank accounts in my ITR?
Yes, all active bank accounts must be disclosed in your ITR, especially those earning interest. This ensures transparency and avoids discrepancies with TDS and interest income reported by banks. TaxBuddy provides a dedicated section for listing all accounts to simplify this process.
Q9. How does TaxBuddy help prevent errors in ITR filing?
TaxBuddy uses AI-driven validations to detect mismatches, missing TDS, and incorrect calculations. It also recommends the correct ITR form, cross-checks prefilled details, and provides step-by-step guidance, reducing the risk of errors and delays in processing refunds.
Q10. What is the penalty for missing the ITR filing deadline?
Missing the deadline results in penalties under Section 234F: ₹5,000 if income ≤ ₹5 lakh, ₹10,000 if income > ₹5 lakh. Interest is also levied on unpaid taxes under Sections 234A/B/C. Filing promptly using platforms like TaxBuddy ensures compliance and helps avoid such penalties.
Q11. Is there a difference in form selection under the old and new tax regimes?
Yes. Some ITR forms, deductions, and exemptions differ between the old and new tax regimes. For example, certain deductions under Section 80C may not apply under the new regime. TaxBuddy helps choose the correct form based on the selected regime and automatically calculates tax benefits accordingly.
Q12. How can I track the status of my income tax refund?
Refund status can be tracked using your PAN and Assessment Year on the Income Tax Department’s e-filing portal. TaxBuddy also provides real-time updates, sending notifications when the refund is processed or credited, making it easier to monitor without logging in separately.
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