ITR Filing 2026: 7 Common Mistakes That Can Trigger an Income Tax Notice or Delay Your Refund

Edited by: Ankita Rai

Updated: NewsPoint | 24 Jun 2026, 3:35 pm

Filing an Income Tax Return (ITR) is a fundamental financial responsibility for millions of working professionals and business owners across India. While the e-filing portal has become significantly automated and user-friendly over the years with pre-filled fields, it has also made the Income Tax Department's automated tracking algorithms incredibly sharp.

Even a minor discrepancy between your reported numbers and the department's database can halt the processing of your return. To save yourself from unnecessary anxiety and potential penalties, financial planners emphasize taking a structured approach to avoid seven incredibly common tax-season blunders.

1. Selecting the Wrong ITR Form

The foundation of a successful tax filing rests entirely on choosing the right form based on your specific financial profile. The department provides multiple forms (ranging from ITR-1 to ITR-4 for ordinary individuals) tailored to distinct income streams.

For instance, while a simple salaried individual with a single house property uses ITR-1 (Sahaj), the moment they hold unlisted equity shares, own cryptocurrency, or have capital gains from selling stocks, they must step up to ITR-2. Filing your taxes using the wrong form automatically rendering your return "defective" under Section 139(9), forcing you to completely re-file from scratch.

2. Ignoring Internal Data Inconsistencies (Form 26AS & AIS)

One of the most frequent causes of an automated IT notice is a direct mismatch between what a taxpayer claims in their return and what third-party financial institutions have logged against their PAN.

Before hitting submit, every taxpayer must download and meticulously reconcile three distinct background documents:

Form 26AS: Tracks all Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) by employers and vendors.
Annual Information Statement (AIS): A comprehensive ledger tracking high-value transactions like stock market purchases, mutual fund investments, and credit card spending.
Taxpayer Information Summary (TIS): A concise, aggregated summary of your taxable income streams.

If your employer reported a specific salary amount but you entered a different figure, or if you failed to report stock dividends recorded in your AIS, the portal's system will immediately flag the mismatch.

3. Overlooking Secondary Sources of Income

Many individuals falsely believe that if an income stream isn't part of their primary monthly salary slip, it doesn't need to be declared. This is a severe mistake.

Taxpayers are legally required to report all forms of secondary income under the head "Income from Other Sources." This includes the interest earned on standard savings bank accounts, recurring deposits, fixed deposits (FDs), corporate bonds, and agricultural or rental revenues. Even minor amounts must be logged, as banks report all interest payouts directly to the tax authorities.

4. Failing to Validate Your Bank Account

If you are expecting a tax refund from the government for excess TDS deducted during the fiscal year, ensure your bank details are active and pre-validated on the e-filing portal.

Even if your bank account number and IFSC code are perfectly accurate, the refund will fail to credit if the account is not formally linked to your PAN and pre-validated on the dashboard. It is vital to check your profile settings beforehand, especially if your bank underwent a recent corporate merger that changed its internal routing codes.

The PAN-Aadhaar Linking Mandate Your bank account validation and return processing cannot go through if your PAN and Aadhaar are not securely linked. Unlinked PAN cards become completely inoperative, leading to higher TDS deduction rates and blocking any potential tax refunds from being generated.

5. Claiming Unverified Deductions and Exemptions

Desperation to reduce your final tax liability can sometimes lead to bad choices. Claiming fake deductions under Section 80C (life insurance, ELSS, PPF), Section 80D (medical insurance), or fabricating fake House Rent Allowance (HRA) receipts without actual rental agreements is a high-risk gamble.

The Income Tax Department heavily monitors high-value or disproportionate deduction claims. If your case is selected for automated scrutiny, failing to produce valid physical premium receipts or rent receipts with the landlord’s PAN will result in heavy penalties for under-reporting income, along with mandatory interest charges.

6. Not Disclosing Foreign Assets and Global Income

For ordinary residents in India, global income is fully taxable. If you hold a foreign bank account, own shares in global companies (including stock options or RSUs granted by multinational employers), or own property outside India, you must fill out the mandatory Schedule FA (Foreign Assets).

Failing to declare these international assets, even if they generated zero income during the year, attracts severe legal consequences under the stringent Black Money Act, which carries massive fixed financial penalties that far outweigh standard tax dues.

7. Forgetting to Verify Your Return Within the Timeline

The job isn't finished the moment you click the "Submit" button. An unverified ITR is legally treated as completely invalid as if you never filed your taxes at all.

Taxpayers must verify their returns within 30 days of electronic submission. The easiest way to complete this is via e-Verification using an Aadhaar-linked OTP sent directly to your registered mobile phone. Alternatively, you can verify via net banking or physically mail a signed copy of the ITR-V acknowledgment form to the Centralized Processing Centre (CPC) in Bengaluru. If you miss this crucial window, your entire return is rejected, exposing you to late filing fees.