Filing your Income Tax Return (ITR) for the first time is a significant financial step. With the income tax filing season for Assessment Year (AY) 2025-26 underway, many new taxpayers often make avoidable mistakes that can delay refunds, trigger notices, or result in unnecessary tax complications. Despite the convenience offered by online filing tools, first-time filers must exercise caution to ensure a smooth and error-free filing process.
Here are the top 8 common mistakes that first-time taxpayers make while filing ITR, along with practical tips to avoid them:
1. Selecting the Wrong ITR Form
One of the most frequent errors by new filers is choosing the incorrect ITR form. For instance, many salaried individuals wrongly assume that ITR-1 (Sahaj) applies to everyone with salary income. However, if you have income from capital gains, house property (other than one self-occupied property), or freelance work, you may be required to file ITR-2 or ITR-3. Filing the wrong form can render your return defective, requiring rectification.
✅ Tip: Review your complete income sources carefully and use the IT portal utilities or consult a tax expert to select the correct form.
2. Ignoring AIS, TIS & Form 26AS
Many salaried individuals rely only on Form 16, overlooking other crucial documents like the Annual Information Statement (AIS), Tax Information Summary (TIS), and Form 26AS. These reflect your income, investments, and tax deductions reported by employers, banks, mutual funds, etc.
Mismatch between these records and your ITR can cause refund delays or invite scrutiny.
✅ Tip: Download AIS, TIS, and Form 26AS from the income tax portal, compare them with your income details, and rectify discrepancies before filing.
3. Failing to Report Exempt Income & Losses
Many new taxpayers believe only taxable income needs to be declared. However, exempt income such as PPF interest, dividends, or capital losses must also be reported. Failure to report exempt income or capital losses may disrupt your financial records and restrict you from carrying forward losses to set off against future gains.
✅ Tip: Maintain a complete record of all income sources, including exempt income and capital losses, and disclose them in the appropriate ITR schedule.
4. Not Maintaining Proof for Deductions
While supporting documents for deductions aren’t uploaded while filing the return, failing to retain them can be risky during assessments or audits. With enhanced controls in ITR forms like Document Identification Numbers (DIN) for specific deductions, keeping proper documentation is crucial.
✅ Tip: Digitally or physically store all proofs for deductions, such as investment proofs, donation receipts, and insurance documents, for at least 6-7 years.
5. Incorrect Classification of Income
Misclassifying income under the wrong head can lead to incorrect tax calculation. For example, reporting freelance income under ‘Salary’, or misreporting short-term capital gains under ‘long-term capital gains’, can trigger errors in tax computation.
✅ Tip: Understand the five heads of income and ensure each income source is reported correctly under the applicable head.
6. Non-Disclosure of Foreign Assets & Income
Many Indian employees working with multinational companies receive foreign shares or ESOPs. If you qualify as a tax resident, you are required to disclose:
- Foreign dividend income
- Capital gains from sale of foreign shares
- Foreign assets in the Foreign Asset Schedule
Additionally, foreign tax deducted can be claimed as relief under applicable Double Taxation Avoidance Agreements (DTAA).
✅ Tip: Properly report all foreign income and assets to avoid penalties and compliance issues.
7. Forgetting to Disclose All Bank Accounts
First-time filers often declare only their salary account, ignoring other savings, NRO, or current accounts. While only one account needs to be pre-validated for refunds, omitting other active bank accounts can raise compliance concerns.
✅ Tip: Declare all active bank accounts (excluding dormant accounts) while filing your return.
8. Skipping the E-Verification Process
Many new taxpayers believe filing is complete once the return is submitted. However, the return is treated as valid only after e-verification within 30 days of filing. Failure to e-verify makes the return invalid, similar to not filing at all.
✅ Tip: Complete e-verification promptly via Aadhaar OTP, Net Banking, or by sending a signed ITR-V to CPC Bengaluru by post.
Final Tips for First-Time ITR Filers
✔ File your ITR well before the due date to avoid late fees and last-minute hassles.
✔ Keep your email ID, mobile number, and address updated on the income tax portal to receive important communications.
✔ Seek help from a tax professional if you feel unsure during any step of the process.
Remember: Filing your ITR is not just a legal obligation—it helps build your financial credibility, ensures smooth loan processing, and establishes your tax record. Filing accurately and on time brings peace of mind and helps you avoid unnecessary stress.
Stay informed, file smart, and enjoy a hassle-free tax filing experience this year!