Top 5 Mistakes to Avoid While Filing Your Income Tax Return for AY 2025–26

ITR

Top 5 Mistakes to Avoid While Filing Your Income Tax Return for AY 2025–26

ITR

As the deadline for filing Income Tax Returns (ITR) for the Assessment Year 2025–26 approaches, individual taxpayers are busy gathering key financial documents—salary slips, bank statements, dividend records, capital gains summaries, and other income-related details from the financial year 2024–25.

Filing your tax return accurately and on time is not just about compliance—it’s about avoiding penalties, unnecessary notices, and delays. Small oversights can lead to big complications, including scrutiny from tax authorities, financial penalties, and loss of certain tax benefits.

Here are the top five common mistakes you must steer clear of to ensure a hassle-free ITR filing experience this year:

1. Missing the ITR Filing Deadline

The due date for most individual taxpayers to file their return is July 31, 2025. Missing this deadline may attract late filing fees ranging from ₹1,000 to ₹10,000, depending on your total income and the delay in filing. Furthermore, filing after the due date can cause loss of certain deductions and prevent you from carrying forward specific losses, such as capital losses.

Tip: Set reminders or work with a tax advisor early to ensure your return is filed well before the deadline.

2. Choosing the Wrong ITR Form

Filing your return using the incorrect form is a common yet critical error. For instance:

  • ITR-1 is applicable for salaried individuals with total income up to ₹50 lakhs and one house property.

  • ITR-2 is suitable for individuals having capital gains or owning multiple house properties.

Filing with the wrong form may lead to return rejection, delayed processing, or even legal notices.

Tip: Refer to the latest ITR form guide from the Income Tax Department or consult a professional to determine the correct form for your profile.

3. Not Reporting All Sources of Income

Every income source—no matter how small—must be reported. This includes:

  • Interest from savings accounts or fixed deposits

  • Dividends from stocks or mutual funds

  • Rental income from property

  • Capital gains, even from minor trades

Failure to report any such income could result in penalties and scrutiny.

Tip: Review all bank accounts (including dormant ones), demat statements, and AIS/Form 26AS to ensure no income is overlooked.

4. Ignoring Form 26AS and Annual Information Statement (AIS)

These two documents are essential tools for cross-verifying your income and TDS details:

  • Form 26AS shows tax deducted at source, advance tax paid, and high-value transactions.

  • AIS provides an extended snapshot of all financial transactions linked to your PAN.

Mismatch between these records and your ITR can trigger notices or delay in refund processing.

Tip: Always reconcile your tax filing data with both Form 26AS and AIS before submission.

ITR

5. Not Verifying Your ITR After Filing

Many taxpayers file their return but forget to complete the final step: verification. An unverified ITR is treated as invalid by the Income Tax Department.

Verification can be done through:

  • Aadhaar-based OTP

  • Net banking

  • Digital signature

  • Offline submission of ITR-V (if needed)

Tip: Complete the verification within 30 days of filing to ensure your return is processed.

Read More: ITR-2 Form Update for AY 2025-26: Eligibility and Key Changes

Accuracy, timeliness, and thoroughness are key to a smooth tax filing experience. Double-checking your documents, choosing the right form, reporting all income sources, and completing the verification process can save you from major hassles.

By avoiding these five common mistakes, you can not only stay compliant but also ensure that your refund (if any) is processed faster and your record remains clean with the tax authorities.

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        Tax Regime Dilemma: Old vs New for FY 2025-26

        Tax Regime

        Tax Regime Dilemma: Old vs New for FY 2025-26

        Tax Regime

        With the financial year 2025-26 underway, taxpayers face an important choice: stick with the traditional old tax regime or shift to the new simplified regime introduced with updated benefits. The old regime rewards taxpayers who actively invest in tax-saving avenues and claim exemptions such as HRA, 80C, 80D, and more. In contrast, the new regime offers lower tax rates, a higher basic exemption threshold, and a straightforward tax filing process but restricts most deductions. Selecting the optimal regime depends on your income structure, eligible deductions, and personal financial strategy. A careful evaluation can ensure maximum tax efficiency.

        Introduction

        Following the Union Budget 2025 announcements by Finance Minister Smt. Nirmala Sitharaman, salaried individuals are reassessing their tax planning for Assessment Year 2026-27.
        The pressing question: Which tax regime should you choose—old or new—for better savings?

        Understanding the Old Tax Regime

        The old tax regime continues to be popular among those who maximize available deductions and exemptions. Let’s take a closer look:

        Tax Slabs (Old Regime – FY 2025-26)

        Income SlabTax Rate (%)
        Up to ₹2,50,000Nil
        ₹2,50,001 – ₹5,00,0005%
        ₹5,00,001 – ₹10,00,00020%
        Above ₹10,00,00030%

        Note: Individuals with a total income up to ₹5,00,000 are eligible for a rebate of ₹12,500 under Section 87A, making their net tax liability zero.

        Tax Regime

        Key Deductions and Exemptions

        • Standard Deduction: ₹50,000 for all salaried individuals.

        • Professional Tax Deduction: Up to ₹2,500 per month (if paid personally).

        • Chapter VI-A Deductions:

          • Section 80C (Investments in PPF, EPF, LIC, ELSS, etc.) – up to ₹1,50,000.

          • Section 80D (Health insurance premium for self and family).

          • Section 80E (Education loan interest deduction).

          • Section 80TTB (Interest income for senior citizens).

        Exemptions Available

        • House Rent Allowance (HRA)

        • Leave Travel Allowance (LTA)

        • Other Special Allowances

        With over 70 deductions and exemptions, the old regime is beneficial for those who proactively plan and invest to claim maximum tax benefits.

        Exploring the New Tax Regime

        The new tax regime aims to simplify the tax filing process while offering lower tax rates across broader income slabs.

        Tax Slabs (New Regime – FY 2025-26)

        Income SlabTax Rate (%)
        Up to ₹4,00,000Nil
        ₹4,00,001 – ₹8,00,0005%
        ₹8,00,001 – ₹12,00,00010%
        ₹12,00,001 – ₹16,00,00015%
        ₹16,00,001 – ₹20,00,00020%
        ₹20,00,001 – ₹24,00,00025%
        Above ₹24,00,00030%

        Note: Individuals with a total income up to ₹12,00,000 qualify for a rebate of ₹25,000 under Section 87A, reducing their tax liability to zero.

        Key Benefits and Allowances

        • Standard Deduction: Enhanced to ₹75,000 for salaried employees (Budget 2025).

        • Employer’s Contribution to NPS [80CCD(2)]: Deduction up to 20% of salary.

        • Agniveer Corpus Fund Contributions [80CCH(2)]: Full deduction for both employee and employer contributions.

        • Recruitment of New Employees [80JJAA]: 30% deduction of additional employee cost for three years (business income).

        Limited Exemptions Allowed

        Unlike the old regime, the new regime allows only a few specific allowances:

        • Daily Allowance (for duty-related expenses)

        • Conveyance Allowance (for official duties)

        • Travelling Allowance (for official tours/transfers)

        • Transport Allowance (for specially-abled employees)

        Marginal Relief under New Regime

        Marginal relief ensures that if your income slightly crosses ₹12,00,000, the additional tax payable does not significantly outweigh the additional income earned.

        Example:

        • Income: ₹12,10,000

        • Tax without marginal relief: ₹61,500

        • Tax with marginal relief: ₹10,000

        Thus, marginal relief can significantly reduce tax liability at the slab thresholds.

        Inter-Head Set Off: A Key Difference

        • Old Regime: Permits setting off a loss from house property (up to ₹2,00,000) against other income heads.

        • New Regime: No set-off of house property loss allowed.

        This is crucial for individuals with significant home loan interest payments.

        Tax Regime

        Quick Decision Checklist: Old vs. New Regime

        CriteriaOld RegimeNew Regime
        Investing under Section 80C (PPF, LIC, ELSS, etc.)?✅❌
        Paying health insurance premiums (80D)?✅❌
        Receiving HRA and paying rent?✅❌
        Repaying education loan (80E)?✅❌
        Preferring simple tax filing?❌✅
        Total deductions below ₹3,00,000?❌✅

        Read More: Late Filing Penalty for Income Tax Returns for FY 2024-25: Understanding Section 234F

        Conclusion: Which Regime Should You Opt For?

        Choosing between the old and new tax regimes for FY 2025-26 depends on your individual financial situation:

        • Choose Old Regime if you actively invest, claim housing and education benefits, or have significant deductions.

        • Opt for New Regime if you seek ease, higher basic exemptions, and don’t avail many deductions.

        Before finalizing your choice, simulate your tax calculations under both regimes. Evaluate your investments, exemptions, and expected tax outgo to determine which option ensures maximum tax efficiency and supports your financial planning goals.

        Remember: The best regime is the one that maximizes your take-home income while aligning with your overall financial strategy!

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              The Old Tax Regime: 4 Advantages That Might Make It the Smarter Choice

              Old Tax Regime

              The Old Tax Regime: 4 Advantages That Might Make It the Smarter Choice

              Old Tax Regime

              As the financial year 2024–25 wraps up, taxpayers are gearing up for the income tax filing season. With the deadline to file Income Tax Returns (ITR) set for July 31, individuals now have ample time to evaluate their options — including which tax regime to opt for.

              Since the introduction of the new tax regime, taxpayers have had the choice between two frameworks:

              • The old tax regime, which allows deductions and exemptions.

              • The new tax regime, which offers lower tax slabs but limits deductions.

              While the new regime might appear attractive at first glance due to the lower tax rates, it’s not always the most financially rewarding choice — especially if you qualify for various exemptions. Here’s a look at four compelling reasons why the old tax regime might be the better option for you.

              You Have Significant Tax-Saving Investments

              The old tax regime supports a wide array of deductions under various sections, including:

              • Section 80C: Investments in PPF, ELSS, LIC premiums, tuition fees, home loan principal repayment, etc.

              • Section 80D: Premiums paid for health insurance.

              • Section 80G: Donations to eligible charities.

              • Section 80DD: Expenditure on treatment of dependent with disability.

              If you’ve strategically invested in instruments that fall under these sections, sticking with the old regime can significantly reduce your taxable income.

              On the flip side, the new tax regime offers very limited deductions, with only a few specific ones like:

              • 80CCD(2): Employer contribution to NPS.

              • 80CCH: Agniveer Corpus Fund.

              • 80JJAA: For new employment.

              You Receive House Rent Allowance (HRA)

              Salaried individuals living in rented accommodation can claim HRA exemption under Section 10(13A) in the old regime. This can be a substantial deduction based on your salary, rent paid, and city of residence.

              HRA exemption is not allowed under the new regime, which can make a significant difference to your final tax outgo, especially if you’re working in metro cities with high rental costs.

              You Fall in the Highest Tax Bracket

              Taxpayers with annual income exceeding ₹10 lakh are taxed at 30% under the old regime, whereas under the new regime, the 30% slab applies only after ₹15 lakh.

              At first glance, this appears favorable — but here’s the catch:
              Without deductions, the new regime offers no real relief to those in the highest tax bracket who already enjoy considerable exemptions under the old regime.

              For such taxpayers, the old regime often results in lower overall tax liability, especially when factoring in deductions for housing loans, children’s education, and insurance premiums.

              The Numbers Speak for Themselves

              Finally, if you’re still unsure — let the data guide you. Use a reliable income tax calculator that compares both regimes based on your income, exemptions, and deductions.

              Often, the old regime emerges as the winner for those who actively plan their taxes through eligible investments and expenses.

              Read More: Discard Income Tax Return: Causes, Consequences, and Recovery Options

              Conclusion

              While the new tax regime promises simplicity and lower tax rates, it doesn’t necessarily result in savings for everyone. The old tax regime continues to be a smarter choice for those who:

              • Invest in eligible tax-saving instruments,

              • Claim HRA,

              • Fall in the highest income bracket, or

              • Have multiple deductions at their disposal.

              Before filing your ITR this year, take a few minutes to run both scenarios through a calculator — because in taxation, one size definitely doesn’t fit all.

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