ITR Filing 2025: 7 Common Errors to Avoid for a Smooth Return

As ITR filing 2025 begins, taxpayers have received a welcome gift: a 45-day extension, shifting the deadline from July 31 to September 15. This extra time is to help everyone adapt to the many new changes in ITR forms introduced by Budget 2024.  

However, even with more time and improved online systems, mistakes can still happen. Errors can lead to incorrect tax calculations, delay your refund, or even result in notices and penalties. To help you avoid these pitfalls, let’s look at some common errors to steer clear of. 

Choose the Right Form and Don't Miss Deadlines 

One of the most frequent mistakes is simply picking the wrong ITR form for your income sources. For example, Budget 2024 now allows you to use the simpler ITR 1 form if you have long-term capital gains (LTCG) up to ₹1.25 lakh from shares or equity mutual funds, instead of the more complex ITR 2 or 3.  

Also, never assume you don't need to file a return just because you have zero tax to pay. If you spent over ₹2 lakh on foreign travel or ₹1 lakh on electricity, or if you need a tax refund or want to carry forward losses, filing is mandatory. Missing the September 15 deadline (for most salaried individuals) can lead to penalties and interest. 

Don't Forget Budget 2024 Tax Changes 

This year, many errors could come from not understanding the new rules from Budget 2024. A major change is in capital gains taxation: from July 23, 2024, long-term gains from listed shares and equity funds will be taxed at 12.5% without indexation (earlier 10%), and short-term gains at 20% (up from 15%). You will now have to separate your gains based on whether they occurred before or after this date.  

Also, remember that the new tax regime is now the default; if you prefer the old regime, you must actively choose it by filing Form 10-IEA before your ITR. You can also only use your actual Aadhaar number, not the enrolment ID, for ITR forms 1, 2, 3, and 5. 

Always Check AIS & Form 26AS 

Many taxpayers make the mistake of not checking their Annual Information Statement (AIS) and Form 26AS. Form 26AS summarises all taxes deducted against your PAN, like TDS, advance tax, and refunds. AIS is even more detailed, showing various income sources (interest, dividends, property sales, credit card spends, etc.). It’s crucial to compare the information in these statements with your own bank statements, Form 16, and investment proofs.  

If you find any differences, contact the person who deducted the tax (like your employer or bank) to get it corrected. Reconciling these helps avoid errors, prevents under-reporting, and ensures faster processing of your return and refund. 

Declare All Your Income Sources 

Whether by accident or on purpose, not declaring all your income sources can be very costly. While AIS/TIS helps, some incomes might be missed, especially those without TDS, like certain interest incomes (e.g., from sovereign gold bonds), rent if it's less than ₹50,000 per month, income from crypto, or freelance work. Also, don't forget interest from savings accounts or dividends reinvested.  

Not reporting exempt income (like agricultural income or PPF interest) under the correct section (Schedule EI) can also make your return faulty. Depending on the error, penalties can range from 50-200% of the unpaid tax, plus interest, and even legal action in severe cases. 

Be Careful with HRA Claims 

Mistakes in claiming House Rent Allowance (HRA) can raise red flags for tax authorities. You need proper documents like a formal rent agreement, rent receipts, and your landlord's PAN (if annual rent exceeds ₹1 lakh).  

Using fake PAN details or having a mismatch between your claimed rent and what your landlord reports can easily be detected. Also, ensure the rental address matches your official records. Even if your employer didn't collect proof, you can claim HRA when filing your return, but always keep all supporting documents ready for a potential audit.  

You cannot claim HRA if you live in your own house or with parents unless you genuinely pay them rent with a valid agreement and bank transactions. 

Read more on: ITR Filing 2025: Deadline Now Extended Till September 15 

Conclusion 

Navigating income tax filing can seem complex, but avoiding these common erro₹ is key to a smooth process. By choosing the right forms, staying updated on Budget 2024 changes, meticulously reconciling your financial data with AIS and Form 26AS, disclosing all income, and being careful with claims like HRA, you can prevent penalties, avoid tax notices, and ensure your tax computation is accurate. A little careful effort now can save you a lot of trouble later. 
 
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.