1. Choosing the Wrong ITR Form
One of the most fundamental errors is selecting an incorrect ITR form. The Income Tax Department has different forms based on your sources of income. For instance, ITR-1 (Sahaj) is for salaried individuals with a total income up to ₹50 lakh from salary,
one house property, and other sources like interest. However, if you have income from capital gains (like selling stocks or mutual funds) or own more than one house property, you cannot use ITR-1. Filing the wrong form can lead to your return being classified as 'defective'. The tax department will issue a notice, and your return won't be processed—halting your refund—until you correct the error by filing a revised return.
2. Incorrect Personal and Bank Details
Even a minor typo in your personal information can cause major delays. Your name, PAN, and date of birth must exactly match the details on your PAN card. Most importantly, your bank account details, including the account number and IFSC code, must be accurate. Your income tax refund is credited directly to your pre-validated bank account. An incorrect or inactive account will lead to a failed refund transaction, forcing you to raise a refund reissue request, which adds to the delay.
3. Not Reporting All Sources of Income
Many taxpayers, especially salaried ones, make the mistake of only reporting the income mentioned in their Form 16. Your ITR must include income from all sources. This includes interest earned from savings accounts and fixed deposits, dividend income, rental income, and any earnings from freelance work or a side hustle. Even if some income is tax-exempt, it often needs to be reported. The tax department has access to your financial transactions through the Annual Information Statement (AIS), and failing to disclose all income can lead to a mismatch, triggering a tax notice and penalties.
4. Ignoring Form 26AS and the Annual Information Statement (AIS)
Before filing, it is crucial to reconcile the information you are reporting with your Form 26AS and AIS. Form 26AS is your tax passbook, showing all taxes deducted at source (TDS) on your behalf. The AIS is a more comprehensive statement detailing all your financial transactions, from salary and interest income to stock and property sales. A mismatch between the income and TDS you declare in your ITR and the data in these forms is a major red flag for the tax department. It can lead to scrutiny, tax demands, and significant delays in refund processing.
5. Claiming Ineligible or Unverified Deductions
While you should claim all eligible deductions to lower your tax liability, it's vital not to claim deductions for which you don't have proof or don't meet the conditions. This applies to popular sections like 80C (for investments), 80D (for health insurance premiums), and House Rent Allowance (HRA). Claiming incorrect deductions can lead to your return being picked for scrutiny, where you will be asked to furnish proof for your claims. If you cannot provide valid documents, the claim will be disallowed, and you may face additional tax and interest charges.
6. Forgetting to E-Verify Your Return
This is perhaps the most critical and final step. Simply submitting your ITR is not enough; you must also verify it. An unverified return is considered invalid, as if it was never filed at all. The deadline for e-verification is 30 days from the date of filing. The easiest way to do this is through an Aadhaar-based OTP. Other methods include using a pre-validated bank or demat account, or through net banking. Until your return is verified, the Income Tax Department will not begin processing it, which means your refund will remain on hold indefinitely.
