How To Avoid Common Tax Filing Mistakes In 2025
Kamal, a Fine Arts teacher at a reputed school in Delhi, earns a handsome salary and supplements his income through freelance work. Despite his financial stability, his tax filing is a mess—he often forgets to file his ITR on time, fails to report all sources of income, and overlooks tax-saving deductions, leading to last-minute panic.
Last year, he called his Chartered Accountant cousin on 31st July at 8:45 PM, scrambling to meet the deadline. However, his cousin assured him that avoiding common tax filing mistakes, such as mismatched income details, incorrect deductions, and skipping advance tax payments, can make ITR filing quick and hassle-free.
If you too have recently learned to file your ITR or wish to make a checklist of things you should consider while filing your tax return, we are here to help you. With the introduction of new tax regulations, a taxpayer can easily make mistakes, resulting in missing deadlines, selecting the wrong ITR form, failing to verify returns, and misreporting income. Any common mistakes in filing income tax returns can lead to delayed refunds, penalties, and unnecessary scrutiny from the Income Tax Department.
As digital tools and filing mechanisms have improved considerably, avoiding all such issues and filing your tax returns without committing any errors is possible.
Tax Filing Deadline And Penalties
Key Tax Deadlines for FY 2024-25 (AY 2025-26)
Tax filing deadlines depend on your incorporation and audit status. Here are the important deadlines you must remember:
Category | Deadline |
Individuals and Non-Audit Cases | 31st July 2025 (AY 2025-26) |
Businesses Requiring Tax Audit Report | 31st October 2025 (AY 2025-26) |
Businesses Having Transfer Pricing Requirements | 30th November 2025 (AY 2025-26) |
These are usual deadlines that the department can extend through official notification. Besides this, you must complete all tax-saving investments (Section 80C, 80D etc.) on or before 31st March of the Financial Year.
1. Penalties For Late Filing
If you fail to file your Income Tax Return (ITR) within the specified time, there can be multiple penalties and interest on tax, such as:
A. Late Filing Fee (Section 234F): If your total income does not exceed INR 5 lakhs, the penalty is INR 1,000. If the income exceeds the limit, the penalty shall be INR 5000 (if filed before 31st December of the due date, and after that it will be INR 10,000)
B. Interest on Tax Due (Section 234A): An interest of 1% per month or part thereof is levied on the outstanding tax amount from the due date until the return is filed.
Besides this, if you were subjected to Advance Tax payments and failed to pay such instalments as per specific deadlines (of advance tax, not detailed in this blog), there might be additional interest under Sections 234B and 234C.
You should also be aware that any late filing may result in the inability to carry specific losses to future years, such as business or capital losses.
2. Filing The Wrong ITR Form
One of the most common tax filing mistakes is selecting the wrong ITR form, which can lead to delays and penalties. It is important to select the correct ITR form based on your assessment category.
Here's a concise guide:
Different ITR Forms For Different Income Categories
ITR Form | Applicability |
ITR 1 (SAHAJ) | For resident individuals with a total income of up to INR 50 lakh from salary, one house property, and other sources (excluding lottery winnings and racehorses). Not applicable to NRIs, company directors, or individuals owning foreign assets. Salaried taxpayers can use Form 16 to file their ITR. |
ITR-2 | For individuals and HUFs with income from salary, multiple house properties, capital gains, and other sources, including NRIs. Does not include income from business or profession. Salaried individuals with capital gains or share trading activity should file ITR-2. |
ITR-3 | For individuals and HUFs earning income from business or profession. Also applicable to salaried individuals with income from intraday share trading or futures and options (F&O). Includes income from salary, house property, capital gains, business/profession (including presumptive income), and other sources. |
ITR-4 (Sugam) | For resident individuals, HUFs, and partnership firms (excluding LLPs) with total income up to INR 50 lakh under the presumptive taxation scheme. Applicable for businesses with turnover up to INR 2 crore (Section 44AD) and professionals with turnover up to INR 50 lakh (Section 44ADA). Freelancers carrying out a notified profession can file ITR-4. |
ITR-5 | For partnership firms, LLPs, Associations of Persons (AOPs), and Bodies of Individuals (BOIs). Used to report income from business, profession, and other sources. |
ITR-6 | For companies (except those claiming tax exemption under Section 11) to report income from business, profession, and other sources. |
ITR-7 | For companies, associations, and trusts claiming income tax exemption under Sections 11, 12A, 12AA, or 13A. Used by charitable trusts, political parties, and other specified entities. |
How To Select The Correct ITR Form For 2025
You can follow these steps to select the correct ITR form for 2025:
1. Determine your residential status (Resident, Not Ordinarily Resident or Non-Resident)
2. Identify and categorise your income into different heads (salary, business and profession, other sources, capital gains or house property)
3. Calculate total income and work out deductions, if any
4. Choose the appropriate form based on your income and categories.
5. If uncertain, consult a tax professional to ensure accurate form selection or refer to tax filing FAQs here.
New Regime vs Old Regime
Ever since the new tax regime was introduced, people often wonder about the key differences between the two. As the Finance Minister recently increased the tax-free income limit (applicable for FY 2025-26, AY 2026-27) to INR 12 lakhs, we will take a look at the slab and other differences between the two regimes for FY 2024-25 (AY 2025-26):
Differences Between The Two Regimes
For AY 2025-26, the difference in the slab rates (individuals less than 60 years) of the two regimes is as follows:
Annual Income | Old Regime | Annual Income | New Regime |
Up to INR 2.5 lakh | Exempt | Up to INR 3,00,000 | Exempt |
INR 2.5 lakh – INR 5 lakh | 5% above INR 2.5 lakhs | INR 3,00,001 - INR 7,00,000 | 5% above INR 3,00,000 |
INR 10,00,001- INR 50,00,000 | INR 1,12,500 + 30% above INR 10,00,000 | INR 7,00,001 - INR 10,00,000 | INR 20,000 + 10% above INR 7,00,000 |
INR 50,00,001- INR 100,00,000 | INR 1,12,500 + 30% above INR 10,00,000 | INR 10,00,001 - INR 12,00,000 | INR 50,000 + 15% above INR 10,00,000 |
More than INR 1 crore | INR 1,12,500 + 30% above INR 10,00,000 | INR 12,00,001 - INR 15,00,000 | INR 80,000 + 20% above INR 12,00,000 |
INR 15,00,001- INR 50,00,000 | INR 1,40,000 + 30% above INR 15,00,000 |
Key Differences Between The Two
1. The Old Regime offers deductions (e.g., INR 1.5 lakh under Section 80C, home loan benefits, HRA, etc.).
2. The New Regime eliminates most exemptions but provides a standard deduction of INR 50,000.
3. Salaried individuals with high deductions may benefit from the Old Regime, while those with minimal deductions might find the New Regime advantageous.
4. Surcharge at applicable rates on income over INR 50 lakhs (old and new regime).
How To Calculate Which One Is Better For You
To know which regime works best for you, it is advisable to calculate taxable incomes under both. You can subtract eligible deductions from the old regime and calculate tax liabilities under both regimes.
If deductions exceed INR 2.5-3 lakh, the Old Regime is preferable; otherwise, opt for the New Regime for lower tax rates.
Not Verifying ITR After Submission
It is compulsory to verify your ITR after submission. You must send a signed copy of the ITR acknowledgement to CPC Bangalore within 30 days of submission of the return. You can verify online through Aadhar-based OTP, net banking or a pre-validated demat account.
If you fail to verify your return, it is considered defective (invalid, never filed). No refunds will be issued, and you might have to file again with penalties.
Conclusion
Avoiding common tax filing mistakes is crucial for seamless compliance and maximising tax benefits. Filing ITR online can be simple if your income structure is straightforward. Errors like missing ITR deadlines, selecting the wrong ITR form, choosing the incorrect tax regime, or failing to e-verify returns can lead to penalties, refund delays, or even rejection of your tax filing.
In case you are still confused about filing and verifying your ITR, it is advisable to contact a tax professional, such as a practicing Chartered Accountant. Additionally, you can explore Grip Invest for smart investment options that can help optimize your tax planning and grow your wealth.
Frequently Asked Questions On Tax Filing Mistakes
1. What is the penalty for an incorrect income tax return?
Filing an incorrect income tax return can attract penalties under Section 270A of the Income Tax Act for misreporting or under-reporting income. The penalty can be 50% of the tax due for misreporting and 200% for willful tax evasion. Additionally, interest under Sections 234B and 234C may be levied on the outstanding tax amount.
2. Can I file a revised return without penalty?
Yes, you can file a revised return under Section 139(5) if you realize errors in your original return. There is no penalty for voluntarily correcting mistakes, provided it is filed before the due date for revised returns. However, if the revised return reduces taxable income significantly, the tax department may scrutinize it further.
3. What is the time limit for income tax rectification?
A rectification request under Section 154 for errors in an income tax return can be filed within four years from the end of the financial year the order was passed. However, it applies only to apparent mistakes like miscalculations or data entry errors and not to changes in income details.
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