With the Income Tax Return (ITR) filing deadline of September 15, 2025, upon us, a massive number of taxpayers are in a final rush to submit their returns. While the process has become more convenient with pre-filled forms and online tools, a last-minute rush can lead to costly errors that result in penalties, delayed refunds, or notices from the Income Tax Department.
Here’s a breakdown of common mistakes made by different categories of taxpayers and how to avoid them.
For Salaried Employees:
- Mistake: Relying Only on Form 16. Many salaried individuals assume that Form 16 from their employer contains all their income details. This is a common error as it often excludes income from other sources like savings account interest, fixed deposits, or dividends. These are now tracked by the Income Tax Department’s Annual Information Statement (AIS).
- Mistake: Incorrect HRA Claims. Failing to submit rent receipts to your employer but still claiming a House Rent Allowance (HRA) exemption can attract scrutiny.
- Mistake: Skipping Deductions. Overlooking eligible deductions like medical insurance premiums (Section 80D), NPS contributions (Section 80CCD), or home loan interest (Section 24B) means you pay more tax than necessary.
- Mistake: Choosing the Wrong Tax Regime. Many individuals don’t compare the tax savings under the old regime (with deductions) versus the new regime (with lower tax rates and no deductions).
How to Avoid: Always cross-verify your Form 16 with your AIS and Form 26AS. Claim all applicable deductions and use the tax portal’s comparison tool to choose the regime that offers the most benefit.
For Freelancers and Gig Workers:
- Mistake: Not Reporting All Income. Income from multiple sources, including international clients, digital platforms, and UPI transfers, is now tracked. Omitting these can trigger red flags.
- Mistake: Forgetting Business Expense Claims. Failing to deduct legitimate business expenses like laptops, internet, co-working space rent, or software subscriptions results in a higher taxable income and a larger tax bill.
- Mistake: Using the Wrong ITR Form. Freelancers and professionals should typically file ITR-3 or ITR-4 (for presumptive taxation), but many mistakenly use ITR-1. Using the wrong form can cause your return to be rejected.
- Mistake: Ignoring Advance Tax. Freelancers are required to pay advance tax in quarterly installments. Missing these payments can result in interest charges under Sections 234B and 234C.
How to Avoid: Maintain meticulous records of all income and expenses. Use the correct ITR form and ensure you’ve paid your quarterly advance tax to avoid penalties.
For NRIs (Non-Resident Indians):
- Mistake: Believing They Are Exempt. NRIs must file an ITR if they have any taxable income in India, such as rental income, interest from bank deposits, or capital gains from the sale of property or stocks.
- Mistake: Confusing Residential Status. The 182-day rule for residential status is crucial and often miscalculated, leading to incorrect tax filings.
- Mistake: Double Taxation Issues. Many NRIs fail to claim tax relief under the Double Tax Avoidance Agreement (DTAA) and end up paying tax in both India and their country of residence.
- Mistake: Providing Incorrect Bank Details. ITR refunds cannot be credited to foreign bank accounts. An NRI must provide a valid NRO/NRE account linked to their PAN.
How to Avoid: Carefully determine your residential status, declare all income earned in India, and ensure your PAN-linked Indian bank account is updated for any refunds.
The key to a hassle-free filing is to be thorough. The Income Tax Department’s systems are now highly sophisticated, tracking income from various sources. The simplest way to avoid trouble is to declare all income, use the right form, and file before the deadline—which is today, September 15, 2025.