The Most Important Choice: Old vs. New Regime
For the Assessment Year 2026-27, the most significant decision you'll make is choosing between the old and new tax regimes. The new regime is the default option and offers lower tax rates with fewer deductions. It provides a standard deduction of ₹75,000
for salaried individuals and a rebate that makes income up to certain levels effectively tax-free. The old regime, however, allows you to claim a wide array of deductions like those under Section 80C (up to ₹1.5 lakh for investments like PPF, ELSS, and life insurance), Section 80D (for health insurance premiums), and exemptions for House Rent Allowance (HRA). The right choice depends entirely on your financial profile. If you have significant investments, a home loan, and high medical insurance premiums, the old regime might save you more money despite its higher tax rates. If you don't use many deductions, the simplicity and lower rates of the new regime could be more beneficial.
Verify Your Financial Mirror: AIS and Form 26AS
Before you even begin filling out your ITR form, your first stop should be the income tax portal to review your Annual Information Statement (AIS) and Form 26AS. Think of the AIS as a comprehensive financial mirror reflecting all the information the tax department has about your financial transactions during the year, including salary, interest income, dividends, and securities transactions. Form 26AS is your tax passbook, showing details of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). Reconciling the information in these documents with your own records is crucial. Any mismatch between what you report and what is in your AIS is a primary trigger for tax notices. If you find discrepancies, use the online facility to provide feedback on the AIS before filing.
Avoid These Common, Costly Mistakes
Every year, taxpayers lose money and peace of mind due to avoidable errors. A frequent mistake is selecting the incorrect ITR form, which can lead to your return being classified as 'defective'. The form you need depends on your sources of income. Another common pitfall is failing to report all sources of income, such as interest from savings accounts or fixed deposits, and income from a previous job if you switched during the year. The tax department has access to this data through your AIS, so omissions are easily caught. Also, ensure all your bank accounts are pre-validated on the portal to facilitate a smooth refund process, if any. Finally, don't forget the last step: e-verification. An ITR filed but not verified within 30 days is considered invalid.
The Consequences of Missing the Deadline
While it might be tempting to procrastinate, filing your ITR after the July 31 deadline comes with definite financial penalties. A late filing fee under Section 234F will be levied. For taxpayers with a total income exceeding ₹5 lakh, this fee is ₹5,000; for those with income up to ₹5 lakh, it is ₹1,000. Beyond the flat fee, if you have outstanding tax liability, you will be charged interest at 1% per month on the amount due, calculated from the day after the deadline. Furthermore, a significant disadvantage of late filing is that you cannot carry forward most losses (for instance, from capital gains) to set off against future income, which can have long-term financial implications. Delays in receiving potential refunds are another direct consequence.
