This is the single most dangerous new error in FY 2025-26 filing. When you log in to incometax.gov.in, you will see two tabs. Tab 1 is for the Income Tax Act, 1961 (AY 2026-27). Tab 2 is for the Income Tax Act, 2025 (Tax Year 2026-27). Your FY 2025-26 return must go under Tab 1 without exception.

Why this matters: FY 2025-26 ended on 31 March 2026, before the Income Tax Act, 2025 came into force. All income earned in FY 2025-26 is therefore governed exclusively by the old Act. Filing under Tab 2 means filing under the wrong legislation for income that does not belong to that framework. The return will be invalid — and worse, it may not generate an obvious error message, leaving you believing you have filed correctly when you have not.

Always click on the tab labelled “Income Tax Act 1961” or “AY 2026-27” when you log in. Verify the tab selection before proceeding to e-File → Income Tax Returns. If you accidentally filed under Tab 2, file a fresh return under Tab 1 immediately (it will be a belated return if the July 31 deadline has passed, and penalties will apply).

Every financial year has a corresponding assessment year that is one year ahead. Income earned from 1 April 2025 to 31 March 2026 belongs to FY 2025-26 and is assessed in AY 2026-27. A significant number of taxpayers — and even some tax professionals filing under time pressure — select AY 2025-26 out of habit from the previous year’s filing cycle.

Filing under AY 2025-26 means you have filed a return for the prior year’s income on top of a return already filed for that year. At best, it creates a duplicate return requiring manual correction. At worst, it results in demand notices as the department processes two returns for the same year and finds discrepancies.

Before confirming the ITR, double-check the assessment year displayed on screen. For income earned in FY 2025-26 (April 2025 – March 2026), the correct selection is always AY 2026-27. This check takes five seconds and eliminates one of the most common filing errors.

For AY 2026-27, the ITR-1 form has been expanded to allow taxpayers with income from up to two house properties to file the simpler Sahaj form. In prior years, any taxpayer with more than one property had to use ITR-2. This change will cause two opposite errors: some taxpayers with two properties will unnecessarily file ITR-2 (wasted complexity), and — more dangerously — some taxpayers will file ITR-1 when their income profile actually requires ITR-2.

You must use ITR-2 (not ITR-1) if you have: capital gains from sale of equity, mutual funds, property, or any other asset; more than two house properties; income from foreign sources; directorship in a company; unlisted equity shares; or agricultural income exceeding ₹5,000. Filing ITR-1 when ITR-2 is required results in a defective return notice under Section 139(9), requiring you to file a fresh return within the time allowed in the notice.

Go through the ITR form selection matrix systematically. If you sold even a single unit of a mutual fund or equity share during FY 2025-26, you need ITR-2. The portal’s guided form selection wizard can assist, but do not rely on it blindly — always verify your income profile against the form applicability rules before proceeding.

The Annual Information Statement (AIS) is the Income Tax Department’s comprehensive record of every financial transaction linked to your PAN. It aggregates data from banks (interest paid, FD receipts), mutual fund companies (dividends, redemptions), stockbrokers (buy/sell transactions), property registrars (sale/purchase of immovable property), employers (salary), foreign remittance banks (FEMA transactions), and GST filings (if applicable).

The department’s automated system compares your filed ITR against your AIS. Any income visible in AIS that is absent from your ITR generates an automated discrepancy flag, which escalates to a Section 143(1) intimation (demand) or, in larger cases, a Section 143(2) scrutiny notice. The system works faster than most taxpayers assume — discrepancy notices have been issued within 30 days of filing in recent years.

Common items visible in AIS that taxpayers forget to declare: savings account interest (especially from multiple banks), FD interest (shown gross, not net of TDS), dividend income (from equity shares and mutual funds since FY 2020-21), rental income from sub-registrar data, and proceeds from stock/MF redemptions.

Download your AIS from the income tax portal (e-File → Income Tax Returns → View AIS) at least two weeks before filing. Go through every entry line by line. If you find an entry that is incorrect, submit feedback on the portal — the “Derived Value” shown in TIS (Taxpayer Information Summary) after your feedback will pre-fill in your ITR. Do not simply ignore an AIS entry you believe is wrong — respond to it via the portal feedback mechanism first.

This mistake is uniquely consequential in FY 2025-26. The new tax regime is the default — if you do nothing, you are taxed under the new regime. For salaried taxpayers (non-business income), you can opt for the old regime at the time of ITR filing, but only if you file on or before 31 July 2026.

If you file a belated return after July 31, 2026, you are automatically locked into the new tax regime for FY 2025-26. This means you lose access to deductions under Section 80C (₹1.5 lakh), Section 80D (health insurance), Section 24(b) (home loan interest up to ₹2 lakh), HRA exemption under Section 10(13A), and LTA exemption, among others. For a taxpayer with significant deductions, the tax difference between regimes can be ₹50,000 to ₹1 lakh or more.

Example: Priya earns ₹18 lakh salary and claims ₹1.5 lakh under 80C, ₹50,000 under 80D, and ₹2 lakh as home loan interest deduction. Her old regime tax is approximately ₹1.92 lakh (after cess). Her new regime tax is approximately ₹2.10 lakh (after cess and standard deduction of ₹75,000). She saves ₹18,000 under the old regime — but only if she files before July 31, 2026.

Calculate your tax liability under both regimes before July 31, 2026 using the comparator tool below. If the old regime is more beneficial, file before the deadline and explicitly select the old tax regime. Never assume the regime selected with your employer applies automatically to your ITR filing.

Submitting your ITR on the portal is not the final step. An ITR that is not e-verified within 30 days of the date of filing is treated as if it was never filed — the submission is invalid. This is one of the most common errors, particularly among first-time filers who believe clicking “Submit” completes the process.

If you miss the 30-day e-verification window, you must file a fresh return. If the original filing date was within the due date but the 30-day verification window has now crossed into the belated period, your fresh filing will be treated as a belated return carrying Section 234F penalties — even though you technically filed in time.

E-verify immediately after filing — do not close the browser. The fastest method is Aadhaar OTP, which completes verification in under 60 seconds. Alternative methods include net banking, bank account number-based EVC, demat account-based EVC, or physical ITR-V sent by speed post to CPC Bengaluru. Always verify the same day you file.

TDS credit is only granted in your ITR to the extent it appears in Form 26AS. If your employer deducted TDS but did not deposit it with the government or filed the TDS return with errors, the credit will not show in your 26AS — and claiming it in your ITR will result in the refund being rejected or the return being selected for scrutiny.

Similarly, if a bank deducted TDS on FD interest but quoted a wrong PAN or made an error in their TDS return, that amount will not appear in your 26AS. Claiming it creates a mismatch that the system flags automatically. For AY 2026-27, the ITR-2 also requires you to specify the TDS section under which tax was deducted — a new disclosure field that must be filled accurately for each TDS entry.

Download Form 26AS and the TDS tab of AIS before filing. Verify that every TDS entry in your records appears in Form 26AS with the correct amount and deductor details. If any TDS is missing, contact the deductor (employer, bank, or other party) to file a corrected TDS return before you file your ITR. Do not claim TDS that is absent from Form 26AS — wait for it to reflect first.

Interest income is the most commonly under-reported income category in Indian ITRs. Taxpayers frequently forget — or deliberately omit — interest from savings accounts, fixed deposits, recurring deposits, and post office schemes. This information is available in AIS from bank-level data submissions and is therefore verifiable by the department in real time.

Savings account interest is fully taxable but eligible for deduction of up to ₹10,000 under Section 80TTA (old regime only; not available under new regime). FD interest is fully taxable at the slab rate. The bank reports gross FD interest to AIS regardless of TDS. If you received ₹50,000 in FD interest and the bank deducted ₹5,000 as TDS (10%), you must declare ₹50,000 as income — not ₹45,000.

Collect interest certificates from all your banks before filing. Add all savings account, FD, RD, and post office scheme interest under “Income from Other Sources” in your ITR. Cross-verify the total against your AIS. If you are in the old tax regime, claim the ₹10,000 deduction under Section 80TTA for savings account interest.

Capital gains are the second most commonly omitted income type. Every redemption of a mutual fund unit, sale of a listed equity share, sale of property, or sale of an unlisted share generates a capital gain (or loss) that must be declared in your ITR. For AY 2026-27, the dual reporting requirement (pre- and post-July 23, 2024 for different rates) has been removed, simplifying the schedule — but the obligation to declare remains absolute.

The AIS captures all stock and mutual fund transactions through data from depositories (NSDL and CDSL) and registrar and transfer agents (RTAs) such as CAMS and KFintech. Every redemption, switch, or sale is visible to the department. Omitting capital gains from your ITR when they are clearly visible in AIS is one of the fastest ways to attract a scrutiny notice.

For property sales, the sub-registrar’s data feeds into AIS. If you sold a flat in FY 2025-26, the sale consideration appears in the department’s records. If you do not declare it, expect a notice. If you invested the proceeds into another property and claim Section 54 exemption, the ITR must contain the capital gains schedule and the reinvestment claim.

Download your capital gains statement from your broker or AMC/CAMS/KFintech before filing. Declare all gains and losses — even if the net gain is zero or you are carrying forward losses. Capital losses can be set off against capital gains and carried forward for 8 years — but only if declared in the ITR filed on time. If you need ITR-2 for capital gains, do not file ITR-1.

Refunds from the Income Tax Department are processed only to bank accounts that are pre-validated on the portal and linked to your PAN. A single digit error in the account number, or an IFSC code that has changed due to a bank merger (many IFSC codes changed post the merger of Lakshmi Vilas Bank, Dena Bank, and others into their acquirers), will block your refund entirely.

The refund will not be returned to you automatically — it sits in a pending state, requiring a rectification request or a fresh refund re-issue application that can take months to process.

Log in to the portal, go to My Profile → Bank Account, and verify that your primary bank account is listed, pre-validated (shown as “Validated”), and has a green status. If you changed your primary bank account recently, add the new account, validate it via bank OTP, and set it as the primary account before filing your ITR. Always nominate the account with the highest balance or your most actively used account as the refund account.

If you are a resident Indian (and not RNOR or NRI) for FY 2025-26, you must disclose all foreign assets and foreign income in your ITR, regardless of whether any income arose from those assets. This includes: foreign bank accounts, foreign shares or securities, foreign life insurance policies, foreign real estate, financial interest in any foreign entity, and any income earned from foreign sources including salary, rent, or dividends.

Non-disclosure of foreign assets by a resident Indian is not merely a tax issue — it is a violation of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Penalties start at ₹10 lakh per asset and can extend to criminal prosecution. The department receives information about foreign assets through automatic exchange of information agreements (AEOI) with over 90 countries. Non-disclosure is increasingly difficult to sustain.

File ITR-2 (not ITR-1) if you have any foreign asset or foreign income. Complete the Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income) in full. Disclose all foreign bank accounts including those with zero balance at year-end if they were open at any point during the financial year. Claim foreign tax credit under Section 90 or 91 to avoid double taxation on income already taxed abroad.

Taxpayers who changed jobs during FY 2025-26 receive two Form 16s — one from the old employer and one from the new employer. Each employer computes TDS based only on the salary paid by them, without knowing about the other employer’s salary. This means each Form 16 individually may show a lower tax liability or even a refund — but when both salaries are combined, the actual liability can be significantly higher.

Filing using only one Form 16 (typically the new employer’s) and ignoring the old employer’s salary income is one of the most common errors that leads to demand notices months after filing.

Add up gross salary from both Form 16s and declare the total as your salary income for the year. Claim TDS from both Form 16s (verify both appear in Form 26AS). Apply deductions on the combined income, not on each income separately. Also verify that your new employer was aware of your previous salary — if not, they may have under-deducted TDS, in which case you may have a self-assessment tax liability to pay before filing.

Section 80C deductions (PPF, ELSS, life insurance premium, home loan principal, tuition fees, NSC, Sukanya Samriddhi), Section 80D (health insurance premium), and Section 24(b) (home loan interest) require specific supporting documents. Claiming these deductions in ITR without the corresponding documents does not trigger an immediate rejection — but if your return is selected for scrutiny (which happens to a subset of returns every year), you will be required to produce documentation.

For AY 2026-27, ITR-2 now requires more granular disclosure of 80C components — you cannot simply claim the full ₹1.5 lakh as a lump sum without specifying the underlying investment types. Incorrect categorisation within 80C attracts verification flags.

Collect all documents before filing: premium receipts for life and health insurance, PPF passbook, ELSS redemption statement or investment confirmation, home loan interest certificate and provisional statement, tuition fee receipts, and NSC/Sukanya investment proofs. Maintain these records for a minimum of 6 years from the end of the relevant assessment year. Do not claim deductions you cannot substantiate.

The income tax portal pre-fills ITR data from Form 26AS, AIS, and employer returns. While this is designed to simplify filing, pre-filled data is not always accurate. Common errors in pre-filled data include: incorrect employer name or PAN, duplicate TDS entries, FD interest shown at the wrong amount (gross vs net), dividend income from securities that were sold but where the demat record was updated late, and mutual fund gains using incorrect acquisition cost.

Accepting pre-filled data without verification is essentially signing a legal declaration that you have verified every entry and confirmed its accuracy. If pre-filled data contains an error and you file without correcting it, you own that error — the department will not accept “the portal filled it in” as a defence.

Treat pre-filled data as a first draft, not a final version. Cross-verify every pre-filled entry against your own records: Form 16, bank statements, interest certificates, broker statements, and demat account records. Correct any entry that does not match. Submit feedback in AIS for data you believe is incorrect. Only then proceed to file.

Many taxpayers believe that once an ITR is filed, nothing can be done about errors. This is incorrect. Section 139(5) of the Income Tax Act, 1961 allows you to file a revised return for AY 2026-27 at any time before 31 March 2027 or before the completion of assessment, whichever is earlier. You can revise the return multiple times within this window.

Common situations that warrant a revised return: discovering a missed income source after filing (dividend from a recently-announced record date), realising you filed the wrong ITR form, finding an error in the bank account number provided for refund, or forgetting to claim a legitimate deduction (such as 80D for a health insurance premium paid in March 2026).

Waiting until a demand notice arrives — rather than proactively filing a revised return — is always the worse option. A voluntary revised return demonstrates good faith and typically avoids penalties. A demand notice puts you in a defensive position where penalties and interest are more likely to be levied.

Review your filed ITR within 7–10 days of filing. If you find any error or omission, file a revised return promptly via e-File → Income Tax Returns → File Income Tax Return → select “Revised” return. Cite the original ITR’s acknowledgement number (ITR-V reference) in the revised return. The revised return supersedes the original in all respects.