1. Filing Taxes After the Due Date
❌ Mistake: Many taxpayers miss the deadline (typically July 31 for individuals and October 31 for businesses), leading to late filing penalties and loss of tax benefits.
✅ How to Avoid It:
✔ Mark your calendar and file early to avoid last-minute technical issues on the income tax portal.
✔ Use Form 26AS and AIS (Annual Information Statement) to verify pre-filled tax details before filing.
2. Not Reporting All Sources of Income
❌ Mistake: Taxpayers often report only salary income, ignoring:
✔ Interest earned on Fixed Deposits (FDs) and Savings Accounts
✔ Capital gains from shares, mutual funds, or real estate
✔ Freelance or side business income
✅ How to Avoid It:
✔ Cross-check income details with Form 16, Form 26AS, and AIS.
✔ Declare all sources of income to avoid notices from the Income Tax Department.
3. Choosing the Wrong Tax Regime
❌ Mistake: Since 2020, taxpayers can choose between the old and new tax regimes. Many pick the wrong one, missing out on tax savings.
✅ How to Avoid It:
✔ Compare the tax liability under both regimes before filing.
✔ Use online income tax calculators to make an informed decision.
4. Incorrect Deductions & Exemptions
❌ Mistake:
✔ Claiming ineligible deductions under Section 80C (PPF, ELSS, Life Insurance, etc.)
✔ Forgetting to claim HRA (House Rent Allowance) or home loan interest (Section 24B)
✔ Not utilizing 80D for health insurance premiums
✅ How to Avoid It:
✔ Keep proper investment proofs and receipts for deductions.
✔ Consult a tax expert if unsure about exemptions.
5. Not Verifying the Income Tax Return (ITR)
❌ Mistake: Filing the ITR but not verifying it within 30 days, making the return invalid.
✅ How to Avoid It:
✔ E-verify instantly through Aadhaar OTP, net banking, or Demat account.
✔ Alternatively, send a signed physical copy to the CPC office in Bengaluru.
6. Entering Incorrect Bank Details
❌ Mistake: Providing incorrect bank account numbers or IFSC codes, leading to delayed or failed refunds.
✅ How to Avoid It:
✔ Double-check bank details before submitting.
✔ Ensure the PAN is linked to the correct bank account for refunds.
7. Ignoring TDS Mismatch
❌ Mistake: Not reconciling TDS deductions in Form 16/16A with Form 26AS, leading to tax demand notices.
✅ How to Avoid It:
✔ Check Form 26AS & AIS before filing.
✔ If TDS is deducted incorrectly, contact the employer/bank for rectification.
8. Not Declaring Foreign Income or Assets (For NRIs & Residents)
❌ Mistake: Not reporting foreign bank accounts, stocks, or property can attract scrutiny under Black Money (Undisclosed Foreign Income and Assets) Act, 2015.
✅ How to Avoid It:
✔ NRIs & residents with foreign assets must file Schedule FA in ITR.
✔ Understand DTAA (Double Taxation Avoidance Agreement) benefits to prevent double taxation.
9. Using the Wrong ITR Form
❌ Mistake:
✔ Salaried taxpayers using ITR-1 instead of ITR-2 (if capital gains exist).
✔ Business owners/freelancers using ITR-1 instead of ITR-3 or ITR-4.
✅ How to Avoid It:
✔ Choose the correct ITR form based on your income type.
✔ Use the ITR utility tool on the income tax portal for guidance.
10. Ignoring Advance Tax Payments
❌ Mistake: Self-employed individuals & high-income earners failing to pay advance tax, leading to interest under Sections 234B & 234C.
✅ How to Avoid It:
✔ Pay advance tax in four installments (June 15, Sept 15, Dec 15, March 15) if total tax liability exceeds ₹10,000.
