Last reviewed: 25 September 2026. Most income-tax notices do not come from aggressive planning - they come from ordinary filing slips. A wrong form, an AIS mismatch, a missed interest entry, or an unverified return can turn a simple filing into months of follow-up. This guide lists the mistakes we see most for AY 2026-27 and exactly how to avoid each one. Because AY 2026-27 covers income of FY 2025-26, the sections cited are from the Income-tax Act, 1961.
At a glance
The mistakes that cause the most trouble
| Mistake | Why it hurts | Fix |
|---|---|---|
| Wrong ITR form | Return becomes defective; needs revision | Match the form to your income sources. ITR-1 is not allowed if you have capital gains other than section 112A long-term gains up to Rs 1.25 lakh, or if you are a director or hold unlisted shares |
| Ignoring AIS / 26AS | Mismatch notice on omitted income | Reconcile every entry before filing |
| Not e-verifying | Return treated as not filed | E-verify within the allowed window |
| Missing interest income | Savings/FD interest shows in AIS | Report gross interest, claim TDS |
| Wrong regime choice | Higher tax than necessary | Compute both; file Form 10-IEA if opting out |
| Ineligible deductions | Disallowance, interest, penalty | Claim only what is eligible, keep proof |
Worked example: the missed FD interest
A salaried taxpayer in Thane earns Rs 14,00,000 in FY 2025-26 and files under the new regime, declaring taxable income of Rs 13,25,000 after the Rs 75,000 standard deduction. She forgets Rs 38,000 of fixed deposit interest, on which the bank deducted Rs 3,800 of TDS. The interest sits in her AIS and Form 26AS, so processing proposes an adjustment under section 143(1)(a).
| Line | As filed | After the adjustment |
|---|---|---|
| Taxable income | Rs 13,25,000 | Rs 13,63,000 |
| Tax including 4% cess (new regime) | Rs 81,900 | Rs 87,828 |
| Extra tax | Rs 5,928, less the Rs 3,800 TDS she had not claimed = Rs 2,128, plus any interest | |
The sum is small, but an open demand holds up the refund, and a pattern of mismatches draws attention. Reporting the interest and claiming the TDS in the first place avoids all of it. Had she compared regimes, the old regime with Rs 1.5 lakh under section 80C and Rs 25,000 under section 80D would have cost about Rs 1,83,456 on the same income, so the new regime was the right choice here.
| Regime check (same taxpayer) | New regime | Old regime |
|---|---|---|
| Deductions used | Standard deduction Rs 75,000 | Standard deduction Rs 50,000, 80C Rs 1,50,000, 80D Rs 25,000 |
| Taxable income, including the FD interest | Rs 13,63,000 | Rs 12,13,000 |
| Tax including cess | Rs 87,828 | Rs 1,83,456 |
Do not forget exempt income and foreign assets
Exempt income - PPF interest, agricultural income, NRE interest - still has to be disclosed, and residents must report foreign assets and income in Schedule FA. This catches employees of foreign companies with RSUs or ESPP shares, and returning NRIs who keep bank accounts abroad. Non-disclosure can attract a Rs 10 lakh penalty under the Black Money Act; since the Finance (No. 2) Act, 2024 that penalty does not apply where the foreign assets other than immovable property total up to Rs 20 lakh, but the disclosure is still required. Our guides on RSU and ESPP taxation and Schedule FA reporting cover the detail, and NRIs and returning residents can see our CA for NRIs service.
If you already made a mistake
For AY 2026-27, a belated return can be filed up to 31 December 2026 and a revised return up to 31 March 2027, with a nominal fee for later revisions. After that, an updated return (ITR-U) can be filed within 48 months from the end of the assessment year with additional tax, following the Finance Act 2025. It is far better to correct proactively than to wait for a notice.
Frequently asked questions
What is the most common ITR filing mistake?
Choosing the wrong ITR form - for example using ITR-1 when you have capital gains other than section 112A long-term gains up to Rs 1.25 lakh, or when you are a director or hold unlisted shares - which makes the return defective and can require a revised filing.
Can I use ITR-1 if I sold listed shares or equity mutual funds?
Only in a narrow case. From AY 2025-26, ITR-1 (and ITR-4) can report long-term capital gains under section 112A of up to Rs 1.25 lakh, provided there is no brought-forward or carried-forward capital loss. Short-term gains, larger long-term gains or any other capital gain need ITR-2 or ITR-3.
Why does AIS and 26AS reconciliation matter?
The Annual Information Statement and Form 26AS show income and TDS the department already knows about. If your return omits something reflected there - savings interest, dividends, a property sale - it triggers a mismatch notice and an adjustment under section 143(1)(a).
Is not e-verifying the return a problem?
Yes. A return that is filed but not e-verified within the allowed window is treated as not filed at all, which can mean losing refunds and the ability to carry forward losses.
Can choosing the wrong regime cost me?
Yes. Picking old vs new regime without comparing both can leave money on the table, and business taxpayers who want the old regime must file Form 10-IEA correctly and on time.
Do I have to report exempt income?
Yes. Exempt income like PPF interest, agricultural income or NRE interest still needs to be disclosed in the return, even though it is not taxed.
What about small interest income from savings accounts?
Savings and fixed deposit interest is taxable and often missed. It appears in AIS, so leaving it out creates a mismatch even if TDS was deducted.
Which deductions get wrongly claimed?
Deductions not actually eligible under the chosen regime (the new regime removes most), or without proof - which can be disallowed and attract interest or penalty.
Do I need to report foreign assets?
Residents must report foreign assets and income in Schedule FA, including RSUs and ESPP shares of a foreign employer and foreign bank accounts. Non-disclosure can attract a Rs 10 lakh penalty under the Black Money Act, but since the Finance (No. 2) Act, 2024 that penalty does not apply where the foreign assets other than immovable property have an aggregate value of up to Rs 20 lakh. Report them anyway.
What if I need to correct a filed return?
For AY 2026-27, a belated return can be filed up to 31 December 2026 and a revised return up to 31 March 2027, with a nominal fee for later revisions. After that, an updated return (ITR-U) can be filed within 48 months from the end of the assessment year with additional tax (Finance Act 2025).
How do I avoid these mistakes?
Reconcile with AIS and 26AS, pick the correct form and regime, report all income including exempt and interest income, e-verify promptly, and keep proof for every deduction.
We reconcile AIS and 26AS, choose the correct form and regime, and file and e-verify accurately.
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