ITR filing AY 2026-27: 8 costly mistakes taxpayers should avoid this tax return filing season

For most taxpayers, filing an income tax return (ITR) is an annual ritual that is tedious, but unavoidable. Taxpayers continue to see it as a cumbersome chore despite the Income Tax (I-T) Department’s attempts to make the process simpler by introducing pre-filled return forms and the Annual Information Statement (AIS). The latter is a detailed summary of incomes earned and specified financial transactions made during a financial year, and thus can serve as a source of self-verification for taxpayers.

At the same time, however, the artificial intelligence (AI) and data-driven scrutiny has become stricter and the room for errors narrower.

For taxpayers, this necessitates filing income tax returns with more care than ever. “The ITR forms for financial year 2025-26 (assessment year 2026-27) introduce a mix of eligibility relaxations and tighter disclosure norms. While the changes aim to simplify filing for small taxpayers, they simultaneously deepen reporting requirements, reflecting the administration’s continued push for data-driven compliance,” says Sudhakar Sethuraman, Partner, Deloitte India.


Since June is when salaried individuals receive their Forms 16 from their employers, it’s best to file the returns soon rather than waiting until 31 July, the due date for completing the process. For those who use ITR-3 or ITR-4 (non-audit cases), the due date is 31 August.

Not only will an early start help you steer clear of the technical glitches that the ITR e-filing portal (incometax.gov.in) tends to be riddled with closer to the due date, but also reduce the scope for errors made in a hurry to complete the process. As of 17 June 2026, the total returns filed had exceeded 42.6 lakh, and around 40.2 lakh were verified, as per incometax. gov.in. According to the chartered accountants ET Wealth spoke to, a majority of individual taxpayers—some estimating the proportion to be as high as 90%—have chosen the new tax regime this time around.

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Circle these key ITR filing due dates
Taxpayer category and due dates (2026)

Note:Do not use this form if you have equity LTCG of over Rs.1.25 lakh, STCG, foreign income, own unlisted shares or are a director in a company.

ITR filing

• Budget (FY2025-26) changes
• Income of up to Rs.12 lakh? No tax outgo under the new regime.
• Salaried taxpayers, pensioners pay no tax up to Rs.12.75 lakh.
• New regime: Exemption limit raised to Rs.4 lakh; I-T slabs liberalised.
• Earning over Rs.25 lakh? Old regime beneficial only if deductions>Rs.8 lakh + standard deduction.
• HRA remains the needle-mover in the old vs new regime selection.
• Tax deducted at source (TDS) will now apply to rent over Rs.50,000 per month.

Here are eight common mistakes that taxpayers should avoid this ITR filing season.

1.Claiming deductions, exemptions not backed by proof

Over the past three years, several salaried taxpayers have found themselves facing a growing number of I-T queries and notices. As part of its ‘nudge’ initiative, the tax department sent automated alerts in 2025, urging taxpayers to re-evaluate their 2024-25 returns and revise them before 31 December 2025.

These include notices on wrongful house rent allowance (HRA) claims, unverified donations, non-disclosed foreign assets and property transactions. Rent paid to parents also came under the scanner last year. “Taxpayers claiming HRA, particularly where rent is paid to parents or relatives, should maintain proper agreements, payment evidence and supporting records to substantiate the claim if questioned,” says Mayank Mohanka, Founder, TaxAaram. com. Your parents, in such cases, must declare this rental income in their ITRs.

ITR forms also tightened compliance requirements for claiming exemptions on donations. “Taxpayers claiming donation-related deductions must now furnish additional details such as the transaction reference number and IFSC code for donations under Section 80G, and the name and permanent account number (PAN) of the political party for claims under Section 80GGC,” says Archit Gupta, Founder and CEO, ClearTax.in.
Also Read: ITR filing for FY 2025-26: Key changes in due dates, ITR forms, and F&O disclosure rules taxpayers must know

2.Not tallying AIS, Form 26AS and your financial details

The first step of your return filing exercise should start with reconciliation of AIS (Annual Information Statement), Form 26AS (tax credit statement) and TIS (Tax Information Statement) both for income as well as taxes. You can access these statements from the e-filing portal.

Sethuraman says the failure to reconcile income reported in the return with data available in AIS and Form 26AS is one of the most common, but preventable, errors that taxpayers tend to make. Such mismatches are a key cause of tax notices. “They often overlook items such as savings bank interest, dividend income, or minor TDS entries. Even minor discrepancies can result in automated notices. It is, therefore, critical to review AIS well in advance, provide feedback on incorrect entries, and ensure that the final return is fully aligned with reported third-party data,” he says.

To be sure, AIS is not yet error-free and it is routine to come across data mismatches and duplication. “Timing differences remain one of the most common causes, for instance, where income is reported by financial institutions in a different period than that in which it is taxable,” he says. Incomplete reporting by financial institutions such as banks can trigger mismatches.

“Taxpayers continue to face data accuracy challenges in the ITR filing process, including mismatches in AIS due to duplicate entries, incorrect classifications and delays in updates. At times, the pre-filled data in the ITR does not reconcile with Form 26AS, making it necessary for taxpayers to carefully review and validate the information prior to filing,” says Shalini Jain, Tax Partner, EY India.

Also, AIS is a dynamic form which does not have a cut-off date for updation. “Several taxpayers have reported delays in the reflection of TDS/TCS credits, particularly in cases involving multiple employers or highvalue transactions, which can impact the accurate computation of tax liability. There are also instances where income is incorrectly categorised in AIS (for example, interest or securities transactions),” she adds.

At your end, you must verify pre-filled data, your own records, and maintain supporting documentary proof to substantiate your claims, so as to avoid errors, delays or potential notices during processing. If you notice mismatches in AIS, use the feedback mechanism available on the income-tax portal to flag the discrepancies. “In Deepak Kumar Chaturvedi v. Addl./JCIT (ITAT Mumbai) case, the tribunal held that additions cannot be made solely on the basis of third-party data reflected in tax systems without corroborative evidence. This reiterates that AIS is an information tool and not determinative of income, placing the onus on taxpayers to rely on facts supported by proper documentation, ensuring that their returns reflect the correct position based on facts, evidence and a careful reconciliation of all available data,” says Sethuraman.

3.Not selecting the right form

If you file returns using the wrong ITR form, your return will be rendered defective, besides the risk of not declaring certain incomes. “Using an incorrect ITR form or failing to furnish mandatory disclosures, incomplete reporting of information relating to donations, political contributions, tax regime options or financial particulars can trigger avoidable queries and scrutiny,” says Mohanka. For example, if you use ITR-1 (Sahaj) instead of ITR-2 despite owning assets overseas, you will not be able to disclose the same, resulting in I-T queries in future. Likewise, if you have clocked long-term capital gains of over Rs.1.25 lakh on redemption of equity mutual fund units, you have to use ITR-2 to make the related disclosures.

4.Not declaring all incomes

Not matter how insignificant the sums are, you must disclose all sources of income. Do not forget to declare foreign income and assets. Under-reporting your income can land you in trouble. “The I-T Department can identify discrepancies by matching information from banks, TDS statements, credit card transactions and other reporting sources. Ensure that you accurately report all income, including capital gains, exempt income and foreign assets wherever applicable, to avoid defective returns or unnecessary scrutiny,” says Gupta.

Sethuraman of Deloitte India says systemgenerated notices and alerts have increased. “Increasingly, these notices are triggered by data mismatches across different reporting systems, such as inconsistencies between AIS and the ITR, discrepancies in TDS claims, or gaps between declared income and high-value transactions. Even seemingly minor omissions, like unreported bank interest, dividend income or small capital gains, can now be readily identified and flagged through automated matching algorithms, leading to compliance queries,” he says.

5.Not being meticulous with capital gains reporting

Many taxpayers tend to find capital gains disclosure cumbersome. “Some fail to correctly categorise gains as short or long term, or overlook the need to segregate transactions based on regulatory cut-off dates,” says Sethuraman. Bear in mind that 23 July 2024 remains a crucial date for such segregation as the capital gains structure for all asset classes was modified in Budget 2024. Many also overlook set-off and carryforward rules, leading to either excess tax payment or future disallowances. If you are engaged in stock market activities, you need to exercise extra caution. “Inadequate reporting of trading activity—especially in derivatives, intra-day transactions, or buyback losses—can lead to under-reporting or misclassification of income,” he adds. It is a tedious task, but you must pore over all your financial statements. “Investors should reconcile broker statements, mutual fund statements and AIS information,” says Mohanka.

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6.Omitting income from former employer

If you switched jobs during the financial year, both your current and previous employers will issue separate Forms 16, without factoring in the salary paid by the other employer. Total tax exemptions claimed could be higher and TDS withheld by each could be lower. The responsibility of ensuring that you declare salaries and taxes paid by both rests with you.

7.Delaying return filing beyond due date

Individual taxpayers—usually, salaried individuals and pensioners using ITR-1 and ITR-2—have to file their returns by 31 July 2026. However, Budget 2026 introduced another due date, 31 August, for individuals who do not require tax audit but use ITR-3 and ITR-4 (Sugam). Bear these new due dates in mind and ensure that you complete the exercise on time. Failure to do so would mean having to shell out late filing fees of Rs.5,000 (Rs.1,000 if your income is less than Rs.5 lakh). The fees will also apply to revised returns, for which the deadline is now 31 March. Also, missing the original due date would deprive you of the opportunity to the pick the old regime, in case it is more beneficial. The new, concessional regime, which offers minimal exemptions, is the default option. “(The forms for AY 2026-27) contain a requirement to mark acknowledgement number for Form 10 IEA (regarding the switching of regimes),” says Sethuraman.

Taxpayers who engage in Futures and Options (F&O) trading are required to disclose key items debited and credited to the statement of profit and loss for the financial year. This includes opening stock, purchases, direct expenses, sales and closing stock. The new ITR forms have introduced specific columns to report turnover from F&O trading and the income from such trading that is credited to the profit and loss account. If you are a salaried taxpayer who engages in such activities, you will have to use ITR-3.

8.Not verifying returns after online submission

Some taxpayers tend to skip verifying their returns on the e-filing portal after online submission. “You must complete the verification of the ITR within the prescribed timeline (30 days) after filing to ensure the return is treated as valid. Failure to do so may result in the return being considered invalid and the benefits of the old tax regime not being available,” points out Jain. To eliminate the risk of missing the verification step, taxpayers should complete the process, which takes just a few minutes, immediately after filing.