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

ITR-2

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

ITR-2

The Central Board of Direct Taxes (CBDT), through Notification No. 43/2025 dated May 5, 2025, has officially released the updated Income Tax Return Form ITR-2 for the Assessment Year (AY) 2025–26. This revised form incorporates several important updates and expanded disclosure requirements for individual taxpayers and Hindu Undivided Families (HUFs).

Who Can File ITR-2?

ITR-2 is applicable to individuals and HUFs whose total income does not include income from profits and gains of business or profession. Specifically, ITR-2 can be filed by those who:

  • Are not eligible to file ITR-1 (Sahaj).

  • Do not earn income under the head “Profits and Gains from Business or Profession”.

  • Do not receive income in the nature of interest, salary, bonus, commission, or remuneration from a partnership firm.

  • Have clubbed income (such as from a spouse or minor child), provided such clubbed income also does not fall under the above business-related categories.

Not Eligible to File ITR-2

Any individual or HUF whose total income includes profits and gains from business or profession, or income received from a partnership firm, cannot file ITR-2.

Key Updates in the Revised ITR-2 Form

The revised ITR-2 form reflects important changes in line with amendments made through the Finance Act, 2024. Here are the notable updates:

1. Capital Gains Segregation

In Schedule-Capital Gains, taxpayers are now required to separately report gains accrued before and after July 23, 2024, aligning with recent legislative changes.

2. TDS Code Disclosure

The revised form mandates reporting of the relevant TDS section code in Schedule-TDS to improve clarity in tax credit claims.

3. Asset and Liability Schedule

Individuals with total income exceeding ₹1 crore are now required to disclose their assets and liabilities, providing a more comprehensive view of their financial position.

4. Capital Gains on Unlisted Securities

Gains arising from the transfer of unlisted bonds and debentures must now be reported as either short-term or long-term capital gains, based on the date of acquisition and transfer.

5. Buy-back Proceeds as Deemed Dividend

Effective from October 1, 2024, buy-back proceeds are to be reported as deemed dividend income under the head “Income from Other Sources”.

6. Disability Deduction Documentation

To claim deductions under Sections 80DD and 80U, it is now mandatory to report valid disability certificates.

7. Expanded Deduction Reporting

There are enhanced disclosure requirements for claiming deductions under:

  • Section 80C (e.g., LIC, PPF, ELSS),

  • Section 10(13A) (House Rent Allowance), and

  • Other relevant provisions.

Read More: New ITR Forms for AY 2025–26: ITR-1 & ITR-4 Now Allow Reporting of LTCG under Section 112A

8. Capital Loss Adjustment on Buy-back

Capital losses incurred on buy-back of shares can now be adjusted, provided the deemed dividend portion is correctly reported as income. This applies to buy-back transactions post-October 2024.

The revised ITR-2 form reflects the government’s continued push for greater transparency, accurate reporting, and comprehensive income disclosure. Taxpayers who fall under the eligible category should carefully review these changes and ensure timely and accurate filing for AY 2025–26.

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ITR-3 Form Update for FY 2024-25: Key Changes Taxpayers Need to Know

ITR-3 Form

ITR-3 Form Update for FY 2024-25: Key Changes Taxpayers Need to Know

ITR-3 Form

Income Tax Return Filing for FY 2024-25 has undergone notable changes with the notification of the revised ITR-3 form by the Income Tax Department. The Central Board of Direct Taxes (CBDT) announced this update via its official handle on the X platform on April 30, 2025. The updated ITR-3 is applicable for Assessment Year (AY) 2025-26 and is intended for individuals and Hindu Undivided Families (HUFs) who earn income from business or professional sources.

Here’s a breakdown of what’s new in ITR-3 and how it impacts taxpayers.

📌 Major Highlights of the New ITR-3 for AY 2025-26

1. Asset and Liability Reporting Threshold Doubled

One of the most taxpayer-friendly updates is the increase in the threshold for mandatory disclosure of assets and liabilities under Schedule AL.

  • Previous Threshold: Rs 50 lakh

  • New Threshold: Rs 1 crore

This change is expected to provide relief to middle-income taxpayers, who will now face fewer compliance requirements if their total assets fall below the revised limit.

2. Capital Gains Reporting: More Granular Disclosures

The Schedule Capital Gains section has been revamped to capture capital gains transactions based on their timing—specifically, whether they occurred before or after July 23, 2024.

This new bifurcation follows the Union Budget 2024 announcement on July 24, which proposed a major change in the tax treatment of long-term capital gains (LTCG) from the sale of immovable property.

ITR-3 Form

3. Optional LTCG Tax Regime for Property Sales

As per the budget proposals:

  • New LTCG Rate: 12.5% without indexation (for property sold after July 23, 2024)

  • Existing Option: 20% with indexation benefit (remains available)

Taxpayers now have the flexibility to choose between the new flat rate of 12.5% without indexation or stick with the current method involving 20% with indexation. This flexibility is especially useful for those who acquired property before July 23, 2024.

4. Improved Transparency Through Dropdowns

The updated form introduces dropdown menus for claiming deductions under various sections (like Section 80C) and more structured section-wise reporting of TDS (Tax Deducted at Source).

This update is designed to enhance:

  • Transparency in disclosures

  • Accuracy in reporting

  • User-friendliness of the filing process

📋 Simplified Filing for Small Taxpayers: ITR-1 and ITR-4 Also Notified

Prior to this, on April 29, the CBDT had also notified ITR-1 and ITR-4 for AY 2025-26. These simplified forms now allow individuals with long-term capital gains up to Rs 1.25 lakh from listed equity shares to use ITR-1 or ITR-4, making compliance easier for small investors.

Read More:New ITR Forms for AY 2025–26: ITR-1 & ITR-4 Now Allow Reporting of LTCG under Section 112A

The new ITR-3 form is part of the government’s broader strategy to modernize and streamline tax compliance for professionals and business owners. With enhanced flexibility, reduced disclosure burdens, and improved reporting tools, the Income Tax Department is clearly moving toward a more transparent and taxpayer-friendly regime.

Taxpayers and professionals are advised to review the new form carefully and consult a tax expert if needed, especially if they are dealing with capital gains or asset disclosures.

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