Income Tax Return filing mistakes that can trigger tax notices and delay refunds for AY 2026-27

With the Income Tax Return (ITR) filing season gathering pace and the July 31 deadline approaching, taxpayers are busy collecting documents and reconciling figures to avoid last-minute mistakes.

While filing a return may seem routine, even minor errors can lead to tax notices, delayed refunds or scrutiny, especially as the Income Tax Department increasingly relies on data from AIS, TIS, Form 26AS, banks, brokers, mutual funds and other reporting entities to detect discrepancies.

Tax experts say that while these categories affect a limited set of taxpayers, ordinary filers may also receive notices if the information disclosed in their returns does not match the data available with the tax department.

According to Rajiv Thakkar, Partner – Direct Tax at Bhuta Shah & Co LLP, taxpayers can avoid common filing mistakes that lead to such issues by following key compliance steps:

Common mistakes to avoid while filing ITR

1. Taxpayers should carefully reconcile bank statements, investment records, Form 26AS, AIS and TIS to avoid mismatches.

2. Choosing the wrong ITR form, especially in cases involving capital gains, foreign income or foreign assets, may lead to defective return notices.

3. All taxable income must be disclosed, even if no TDS has been deducted or the income is reflected elsewhere.

4. Capital gains arising from the sale of shares, mutual funds, property or other assets should be reported accurately after reconciling broker statements, transaction records and AIS data. Errors in reporting gains or losses are among the most common reasons for tax mismatches.

5. Foreign assets, foreign income, Virtual Digital Assets (VDAs) and Schedule AL (where applicable) must be reported accurately.

6. Transactions such as property purchases, foreign travel spending, large cash deposits, credit card spending and foreign remittances should be reviewed carefully. Since these transactions are reported to the tax department through the Statement of Financial Transactions (SFT) framework, any mismatch between spending patterns and income disclosures may invite queries.

7. Adequate supporting records should be maintained for all significant and high-value financial transactions.

8. Returns must be e-verified within the prescribed timeline to ensure timely processing and refund release.

So, before hitting 'Submit', take a few minutes to review your return carefully. Make sure you have reported income from all sources, matched the details in AIS and Form 26AS with your records, correctly disclosed any capital gains, and kept supporting documents handy in case the tax department seeks clarification later.