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8 biggest income tax mistakes to avoid next year: From wrong tax regime choices to capital gains errors

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By Sangeeta Ojha

3 min read | Updated on December 27, 2025, 11:58 IST

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SUMMARY

Avoid these 8 common income tax mistakes, from choosing the wrong regime to misreporting gifts and capital gains. Stay compliant!

income tax mistakes to avoid in 2026

Staying organised and filing on time can help you avoid penalties, delays, and unnecessary stress. | Image: Shutterstock

As taxpayers gear up for 2026, they should be aware that the biggest tax mistakes of 2025 stemmed from mismatched records, misreported capital gains and confusion over multiple income sources.

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Staying organised throughout the year, verifying entries in AIS/TIS early and understanding the tax rules for new-age income will help taxpayers avoid the same pitfalls in 2026.

Upstox spoke to financial experts on the biggest income tax mistakes people should avoid in 2026.

Don’t repeat 2025’s errors: 8 income tax mistakes to avoid in 2026

1. Choosing the wrong tax regime: Not choosing the tax regime that is most beneficial for your income structure. "Using multiple tax calculators available online, you can enter your estimated income and arrive at the most beneficial tax regime for you," said CA Chandni Anandan, Tax Expert at ClearTax.
2. Waiting till the last minute to file returns: One of the biggest tax mistakes to avoid next year is waiting till the last minute to file your return.
3. Not reporting all income: "Many people also forget to report all their income, claim the right deductions, or check Form 26AS/ AIS before filing," said CA Abhishek Soni, CEO & Co-Founder, Tax2win.
4. Missing documents, advance tax deadlines and notices: Not keeping documents ready, missing advance tax deadlines, and ignoring notices are other common errors.
5. Delaying tax-saving investments: Delaying your tax-saving investments can lead to missed deductions and higher taxes. If you have not submitted tax-saving investments by March 2026, you are not eligible for any tax benefits. "Investing or reporting them late during the financial year may mean TDS has already been deducted without considering the deductions, resulting in less disposable income in your hands. The best time to plan your taxes and invest in tax-saving investments is at the start of the financial year in April," said CA Chandni Anandan.
6. Capital gains errors: Assuming income up to ₹12 lakh under the new regime is entirely tax-free. "Capital gains and other income taxed at special rates are excluded from the rebate, and if the tax on such gains exceeds ₹10,000, you must pay advance tax, failing which attracts 1% penal interest under Sections 234B and 234C," said Chandni Anandan.
7. Forgetting Form 12B when switching jobs: Forgetting to submit Form 12B when switching jobs results in incorrect TDS and potential interest liabilities.
8. Ignoring the taxability of gifts: "Gifts from friends or distant relatives become taxable if the total value exceeds ₹50,000 in a year," said Chandni Anandan.

Staying organised and filing on time can help you avoid penalties, delays, and unnecessary stress.

Next year will see the new simplified Income Tax Act, 2025 come into effect from April 1, replacing the over six-decade-old current Income Tax Act, 1961.
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About The Author

sangeeta-ojha.webp
Sangeeta Ojha is a business and finance journalist with vast experience across leading media platforms, including Mint and India Today. Passionate about personal finance, she has built a reputation for covering a wide range of PF topics—from income tax and mutual funds to insurance, savings, and investing.

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