ITR filing mistakes that can wreck your Finances in AY 2026-27: 13 errors to avoid

With the income tax return (ITR) filing season for Assessment Year (AY) 2026-27 underway, tax experts are urging taxpayers to avoid common mistakes that can lead to defective returns, delayed refunds, notices from the Income Tax Department and even additional tax liabilities.

The due date for filing ITR-1 and ITR-2 for FY2025-26 is July 31, 2026, while taxpayers filing ITR-3 and ITR-4 have until August 31, 2026. Experts caution that rushing to file at the last minute often results in errors that can prove costly.

Wrong ITR Form

One of the most common mistakes is selecting an incorrect ITR form. Salaried individuals with income below ₹50 lakh and no capital gains are generally required to file ITR-1, while those with business or professional income need to use ITR-3.

Filing an incorrect form can result in a defective return notice and delay processing.

Wrong Assessment Year

For income earned during FY2025-26, the corresponding assessment year is AY2026-27. Mentioning an incorrect assessment year could create complications, including the possibility of double taxation and penalties.

Incorrect personal or bank details

Taxpayers should ensure that their name, PAN, date of birth, email address and contact details match PAN records.

Incorrect bank account details or IFSC codes can delay refunds and trigger bank validation errors.

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Forgetting to report

Experts warn that taxpayers frequently omit income from savings accounts, fixed deposits, capital gains, rental income and other sources.

Even exempt income needs to be disclosed. For example, long-term capital gains from equity shares or equity-oriented mutual funds up to ₹1.25 lakh may be tax-free, but the details still have to be reported in the capital gains schedule.

Form 26AS, AIS and TIS

Before filing returns, taxpayers should reconcile their income and taxes with Form 26AS, Annual Information Statement (AIS) and Taxpayer Information Summary (TIS).

These documents contain information on TDS, investments, securities transactions, GST turnover and foreign remittances. Any mismatch between Form 16, Form 26AS and AIS may result in lower refunds or higher taxes.

MUST READ: Form 16 to be issued this month: Why salaried taxpayers should review it carefully

Multiple Form 16s

Individuals who changed jobs during the year may receive Form 16 from more than one employer.

Experts advise taxpayers to aggregate salary income from all employers instead of reporting only the latest employer's Form 16.

Missing out on deductions

Many taxpayers fail to claim deductions available under various sections of the Income Tax Act, thereby increasing their tax burden unnecessarily.

Similarly, employees who failed to submit rent receipts to their employers can still claim House Rent Allowance (HRA) benefits while filing their returns.

Advance Tax Defaults Attract Interest

Taxpayers with additional income streams are required to pay advance tax in instalments during the financial year.

Failure to pay advance tax or underpayment attracts interest at 1% per month on the outstanding amount.

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NSC interest

Another common misconception relates to National Savings Certificates (NSCs).

While NSC investments qualify for deductions under Section 80C, the interest earned is taxable and must be reported under "Income from Other Sources." Failure to disclose such income can result in tax demands later.

E-verification

Filing the return is only half the process.

Taxpayers must e-verify their ITR within 30 days through Aadhaar OTP, net banking or Electronic Verification Code (EVC). Alternatively, they can send a signed ITR-V to the Centralised Processing Centre.

Failure to complete e-verification within the prescribed period could render the return invalid, requiring taxpayers to file afresh.

With tax authorities increasingly relying on technology-driven systems and data matching, experts say accuracy and reconciliation are more important than ever. Taking time to verify information before filing can help taxpayers avoid notices, penalties and unnecessary financial setbacks.

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