Common income tax mistakes in India and how to fix them (2026-27)
The income tax mistakes that cost most: late filing, wrong regime, missed AIS income, job-change shortfalls, challan errors and fake claims, with fixes.
The income tax mistakes that cost individuals most are simple ones: filing after the due date (losing the old regime and loss carry-forward, and paying a late fee of up to ₹5,000), missing income that appears in the Annual Information Statement (interest, dividends, share sales), not telling a new employer about earlier salary, paying tax under the wrong year or type of challan, claiming deductions the new regime does not allow, and using a bank account that is not pre-validated, which holds up refunds. Almost all of these can be fixed with a revised, belated or updated return, a challan correction or AIS feedback, provided you act before the relevant deadline. This guide lists each mistake, why it hurts and how to put it right.
The mistakes at a glance
| Mistake | What it costs | Fix |
|---|---|---|
| Filing after 31 July (or your due date) | Fee up to ₹5,000, interest at 1% a month on unpaid tax, no old regime, losses not carried forward | File a belated return quickly; next year file on time |
| Leaving out interest, dividends or gains in the AIS | Tax demand, interest, possible penalty for under-reporting | Revised return or updated return |
| Not declaring a previous employer's salary | Lower slabs applied twice, so tax due at filing | Pay self-assessment tax before filing |
| Wrong tax year or payment type on a challan | Tax shows as unmatched; demand raised | Request challan correction through the portal or your assessing officer |
| Claiming HRA, 80C-type or 80D-type deductions in the new regime | Claims disallowed, demand with interest | Choose the old regime in time, or remove the claims |
| Bank account not pre-validated, or PAN–Aadhaar not linked | Refund not paid; higher TDS | Validate the account and link PAN on the portal |
| Not e-verifying within 30 days | Return treated as not filed | E-verify, or request condonation of delay |
| Fabricated rent receipts or donations | Penalty for misreporting, which can be 200% of tax | Do not claim; correct through an updated return if already claimed |
1. Filing late
The due date for most individuals is 31 July after the tax year (section 263 of the Income-tax Act, 2025; 31 August for non-audit business and professional cases). Missing it triggers:
- the late fee under section 428: ₹5,000, or ₹1,000 if total income does not exceed ₹5 lakh;
- interest under section 423 at 1% a month on any unpaid tax;
- the loss of the old regime for that year, because it can only be chosen in a return filed by the due date;
- no carry-forward of business or capital losses.
Details are in the due date and late fee guide.
2. Ignoring the Annual Information Statement
Banks, registrars, brokers, property registrars and others report your transactions against your PAN. If your return shows less, the system flags a mismatch. The most common gaps are savings and FD interest, dividends, mutual fund redemptions and interest on income tax refunds. Download the AIS before filing and match every line. See the AIS and 26AS mismatch guide.
3. Job change shortfall
When you change jobs, each employer computes TDS as if its salary were your only income. Both apply the lower slabs and the full standard deduction. Illustrative example: two jobs of ₹9 lakh each in one year. Each employer finds tax nil under the new regime. Your actual total income is ₹18 lakh − ₹75,000 = ₹17,25,000, and tax is ₹1,50,800. All of it is payable when you file, with interest for not paying advance tax. Give the second employer your earlier salary details so that TDS is spread correctly.
4. Challan errors
Paying self-assessment tax as advance tax, or choosing the wrong tax year, is common, especially now that the portal handles both the 1961 Act (up to FY 2025-26) and the 2025 Act (from tax year 2026-27). Check the challan before paying. If a payment is already made, the portal offers a challan correction facility for some fields, and others need a request to your assessing officer.
5. Mixing regime rules
In the new regime you cannot claim HRA, the investment deduction (section 123), health insurance (section 126), your own extra NPS, interest on a self-occupied home, or professional tax. You can claim the ₹75,000 standard deduction and employer NPS. Return utilities usually block wrong claims, but third-party software and manual calculations sometimes miss them. See the deductions guide.
6. Refund problems
A refund needs a pre-validated bank account in your name and an operative PAN linked with Aadhaar. See the refund delay guide.
7. Not verifying the return
A return that is not e-verified within 30 days is treated as never filed. Verify straight after submitting, using Aadhaar OTP if your mobile is linked.
8. Fake claims
Some agents offer to "increase your refund" by adding rent, donations or medical expenses you never paid. The department matches rent with landlords' PANs and donations with charities' statements. Misreporting can attract a penalty of 200% of the tax involved, on top of the tax and interest. If such claims were made in an earlier return, an updated return lets you pay the tax with additional tax before the department acts. See the updated return guide.
How to avoid these mistakes next year
- Choose your regime early using the old vs new regime comparison, and tell your employer.
- Check the AIS each quarter.
- Pay advance tax if your other income is significant.
- Use the ITR filing checklist.
- File in June or early July, not on 31 July.
- If your affairs are complicated, get help. See self-filing or hiring a CA.
All official links are in the official sources guide.
Frequently asked questions
I received an intimation showing a demand. Is that a notice?
An intimation after processing compares your return with the department's computation. If it shows a demand, check the reason given. Pay it if correct, or file a rectification request or response online if not.
Can I correct a mistake myself without a CA?
Yes. Revised returns, AIS feedback, rectification requests and updated returns are all available online. Get help for anything involving penalties or scrutiny.
What if I never filed for an earlier year?
An updated return may allow you to file for earlier years within the time limit, by paying additional tax.
Sources
- Income Tax e-filing portal: AIS, challan correction, e-verification, rectification and refund status
- Income Tax Department: sections 263, 423 and 428 of the Income-tax Act, 2025
- Unique Identification Authority of India: Aadhaar updates for PAN linking and OTP
