With the ITR filing deadline extended to September 15, 2025, for non-audit cases, taxpayers must exercise caution while claiming deductions. The Income Tax Department is adopting a zero-tolerance approach towards false or ineligible claims in the Income Tax Return (ITR). Avoiding such errors is essential to ensure smooth processing of your return and to stay clear of penalties or legal issues.
⚠️ Penalty for Ineligible Deduction Claims
Under Section 270A of the Income Tax Act, 1961, misreporting income or making false deduction claims can attract a penalty of up to 200% of the tax payable. In serious cases, prosecution under Section 276C is also possible. Besides penalties, interest may also be levied on the unpaid tax.
✅ Common Deduction Sections to Be Claimed Carefully
- Section 80C – Investments in PPF, ELSS, LIC, tuition fees
- Section 80D – Health insurance premium
- Section 80E – Interest on education loan
- Section 80TTA/80TTB – Savings account interest
- Section 80G – Donations to eligible charitable institutions
📝 5 Essential Tips to Avoid Ineligible Deduction Claims in ITR Filing
1. ✔️ Choose the Correct Tax Regime
- New Tax Regime (default from FY 2024-25): Lower tax rates, but most deductions disallowed (e.g., 80C, 80D, HRA, LTA).
- Old Tax Regime: Higher tax rates, but allows deductions and exemptions.
Tips:
- Use tax comparison calculators online before choosing.
- Salaried individuals can opt for either regime via the ITR form.
- Business/professionals must submit Form 10-IEA to opt in/out of the new regime.
- Ensure consistency with the regime declared to your employer.
2. 📂 Maintain Proper Documentation
Keep valid proofs ready to support your deduction claims:
- 80C: PPF passbooks, ELSS statements, LIC premium receipts, school tuition fee receipts.
- 80D: Health insurance premium receipts.
- HRA: Rent agreement, rent receipts, PAN of landlord (if rent exceeds ₹1 lakh/year).
- Home Loan: Principal and interest certificates from banks/NBFCs.
- Donations: Receipts from eligible institutions. Only non-cash donations over ₹2,000 are valid.
- 80E: Interest certificate from the lender for education loans.
3. 🔄 Reconcile with AIS and Form 26AS
Before filing your return, cross-check:
- Annual Information Statement (AIS): Shows income from interest, dividends, property sales, mutual funds.
- Form 26AS: Reflects TDS, advance tax, and self-assessment tax payments.
Tip: Any mismatch can lead to a notice. If errors exist, raise feedback on AIS or contact the deductor for correction.
4. 🚫 Avoid Common Ineligible Claims
- Don’t claim deductions disallowed under the new regime.
- Don’t include personal or inflated expenses.
- Avoid cash-mode payments where deductions are only allowed via banking channels.
- Do not double claim exemptions like HRA and 80GG.
5. ✅ Complete ITR Verification on Time
After filing, make sure to verify your return:
- e-Verification: Use Aadhaar OTP, net banking, or pre-validated bank account.
- Offline: Send signed ITR-V to CPC, Bengaluru, within 30 days.
Note: Returns not verified are considered as not filed.
🧾 Final Word
- To ensure a hassle-free ITR filing experience for AY 2025-26, make only eligible deduction claims, choose the correct tax regime, and verify all details with AIS/26AS. Filing honestly and accurately will help you avoid penalties and potential legal action.