From AIS mismatches and wrong ITR forms to skipped Schedule FA — the 15 mistakes that trigger income tax notices, defective returns and rejected refunds.
The income tax department's systems are now powered by AIS, TIS, Form 26AS, SFT reports from banks, mutual funds, registrars and even your credit card company. Filing ITR is no longer a private declaration — it's a reconciliation with data the department already has. These are the 15 most common mistakes we see at Taxpex and the exact fix for each.
The Annual Information Statement consolidates your salary, interest, dividend, capital gains, rent, foreign remittances, large purchases, credit card spend and many other data points. If your ITR says you earned ₹4L in dividends but AIS shows ₹4.6L, expect a 143(1) intimation with extra tax demand.
Filing ITR-1 with capital gains, or ITR-2 with F&O income, gets you a defective return notice under Section 139(9). You have 15 days to file the correct form — miss it, and the original return is invalid.
Read our complete ITR form guide for AY 2025-26 — see the link in the article footer.
Savings account interest, FD interest, dividends, family pension, gift income above ₹50,000, and crypto gains are all reportable. Banks now send SFT reports for FDs above ₹10 lakh, dividends above ₹5,000 and savings interest in bulk. If you skipped them last year, expect a mismatch this year.
80C, 80D, HRA, donations under 80G — all need documentary proof if scrutinized. The department now cross-checks 80G donations with the donee's filings via Form 10BD. A donation you claim that the trust didn't report becomes a disallowed deduction with 200% penalty.
If you claim ₹85,000 TDS but Form 26AS shows ₹72,000, the system reduces your refund or raises a demand. The reverse is even worse — TDS in 26AS that you didn't claim is silent money you're leaving on the table.
Any Indian resident holding a foreign bank account, foreign shares (including US ESOPs of MNC employees), foreign mutual funds, crypto in foreign wallets, Wise or Payoneer balance, or signing authority on a foreign account must report it in Schedule FA — even if the balance is ₹100. Penalty under the Black Money Act is ₹10 lakh per year of non-disclosure.
If your employer is a US-headquartered company and you got RSUs that vested abroad, you have a Schedule FA obligation from the day they vest — regardless of whether you sold or held.
If you returned to India mid-year, spent more than 182 days, or worked abroad on a short assignment, your residential status (Resident, RNOR, NRI) determines what global income is taxable. The wrong status can lead to either paying tax on income that isn't taxable in India, or hiding income that is.
Business loss, F&O loss, short-term and long-term capital losses, and speculative losses can be carried forward only if the original return is filed by the due date. Belated returns kill the carry-forward — only house property loss survives.
If you have business income and forget to file Form 10-IEA before the due date, you're locked into the new regime for the year. For salaried, you can still switch at the time of filing — but only if you actually run the comparison.
An unverified ITR is treated as never filed. You have 30 days from the date of submission to e-verify via Aadhaar OTP, net banking, demat, EVC or send the signed ITR-V to CPC Bangalore. Miss it, and you're back to square one — with the late-filing meter still running.
Family dinners, vacations, jewellery, household groceries shown as 'business promotion' — it's the easiest way to get a Section 143(2) scrutiny notice. The department now uses AI to flag unusual expense ratios versus income. If your 'business meal' expense is 12% of revenue, expect questions.
Income tax refunds are now credited only to pre-validated bank accounts linked to your PAN. If your validation expired (e.g. after KYC update) or you closed the account, the refund bounces and you have to refile a refund reissue request.
Got salary arrears, gratuity, pension commutation or VRS in a lump sum? Section 89 lets you spread the tax across the years it actually relates to — often saving lakhs. File Form 10E on the portal before the ITR; without 10E, the AO disallows the relief mechanically.
If you hold shares of any unlisted company — your own startup, a friend's company, ESOPs of an unlisted Indian or foreign entity — it's a mandatory disclosure in ITR-2 / ITR-3 (Schedule of Unlisted Equity Shares). Even ₹0 of income from those shares does not exempt you from disclosure. The penalty for non-disclosure of foreign unlisted equity is severe.
Brokers send capital gains statements based on FIFO at scheme level. If you have SIPs across multiple folios in the same fund, or transferred holdings between demat accounts, the statement may not match what the AIS shows. Filing the broker number blindly is a top reason for 143(1) demands.
| Situation | Action |
|---|---|
| Spotted an error before 31 December 2025 | File a revised return under Section 139(5) |
| Missed claiming TDS / refund, due date over | File revised return till 31 Dec 2025; after that, no refund possible via ITR-U |
| Missed declaring income, want to come clean | File ITR-U under Section 139(8A) — additional 25%/50%/60%/70% tax depending on the year |
| Got a defective return notice under 139(9) | Respond within 15 days with the corrected return — same acknowledgement number |
| Got a 143(1) intimation with demand | Respond on the portal within 30 days; pay or contest |
| Got a 143(2) scrutiny notice | Engage a CA immediately — response window is short, stakes are high |
First, verify whether the AIS entry is correct — sometimes banks or brokers wrongly report against your PAN. If it's genuine income you missed, file a revised return before 31 December 2025. If AIS is wrong, submit feedback on the portal and keep documentation.
Yes — you can revise as many times as needed before 31 December 2025 or before the return is processed under Section 143(1), whichever is earlier. Each revised return supersedes the previous one.
Check the status on the portal under 'Refund / Demand'. Common reasons: bank account not pre-validated, address mismatch, ITR not e-verified, or 143(1) under processing. Raise a refund reissue request if it shows 'failed', or raise a grievance on the portal if it shows 'under processing' beyond 90 days.
Only after verifying. Most 143(1) demands come from TDS mismatch, deduction disallowance, or AIS reconciliation differences. If you have proof your filing was correct, file a rectification request under Section 154 on the portal — don't pay a demand you don't owe.
For under-reporting: 50% of the tax on the under-reported income. For mis-reporting (deliberate concealment): 200%. Plus interest. Plus prosecution in extreme cases. The honest route is always cheaper.
Modern ITR filing is a reconciliation exercise, not a declaration. The income tax department already knows most of your numbers — your job is to make sure your return matches and that you've claimed every legitimate deduction. Get AIS, 26AS and your bank statements open before you start. Or get a CA to do it for you — the cost of one review is almost always less than one avoidable penalty.
Senior contributor at Taxpex Consultancy. Reviewed by a practising Chartered Accountant. Published on 12 April 2026 · Updated on 12 April 2026.
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Every ITR due date for AY 2025-26 — salaried, businesses, audit cases, revised and belated returns — plus penalties, interest under 234A/B/C and how to avoid a notice.
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