With sweeping changes introduced by Budget 2024, Indian taxpayers filing ITR for FY2024-25 have until 15 September to submit returns. However, experts warn that missteps—from wrong ITR forms and HRA fraud to capital gains misreporting—could lead to delayed refunds, penalties, or even prosecution. Caution that this relief period should not lead to complacency.
Indian taxpayers have been granted a 45-day extension—till 15 September 2025—to file their Income Tax Returns (ITR) for FY2024-25, following major changes introduced in Budget 2024. However, experts caution that this relief period should not lead to complacency. From incorrect ITR forms to flawed capital gains reporting and house rent allowance (HRA) frauds, a series of common missteps could result in heavy penalties, delayed refunds, or in some cases, even prosecution.
“The pre-filled data from Form 16, 26AS, AIS/TIS, real-time validation and auto-calculations have reduced the chances of errors, but if the data you provide and confirm is not correct, it may lead to mistakes in the return,” said Kuldip Kumar, Partner, Mainstay Tax Advisors.
1. Picking the Wrong ITR Form or Skipping Returns
Choosing an incorrect ITR form remains one of the most frequent errors. “Different income sources and taxpayer categories require specific ITR forms and using an incorrect form can lead to rejection or processing delays,” explained Umesh Kumar Jethani, Founder, ApkiReturn.
This year, ITR-1 can now be used even by those declaring long-term capital gains (LTCG) of up to ?1.25 lakh from equities—a key simplification over earlier years. But not everyone is exempt from filing. Individuals claiming TDS refunds or intending to carry forward capital losses must file, even with zero net tax.
2. Ignoring Budget 2024 Tax Changes
Budget 2024 brought major structural changes in ITR forms and tax rules, especially around capital gains. The biggest shift: indexation benefits for long-term gains are removed after 23 July 2024, and the LTCG rate is standardised at 12.5 per cent, while short-term capital gains (STCG) are now taxed at 20 per cent, up from 15 per cent.
“The capital gains schedule now mandates segregation based on the date of transfer—before and after 23 July 2024,” said Shubham Agrawal, Senior Taxation Adviser, TaxFile.in.
Another critical change: the new tax regime is now default, and those wishing to use the old regime must explicitly opt out by filing Form 10-IEA before submitting ITR.
3. Not Reconciling Form 26AS and AIS
Taxpayers must cross-check their Annual Information Statement (AIS) and Form 26AS with bank and employer records. AIS includes everything from dividends and securities trades to credit card spending and foreign remittances.
“Reconciliation of both with the ITR helps avoid discrepancies, prevents underreporting or duplicate claims, facilitates faster processing of returns and refunds, and avoids tax notices,” advised Amit Maheshwari, Tax Partner, AKM Global.
4. Failing to Declare All Income
Many filers omit income streams such as crypto earnings, freelance revenue, or capital gains not reflected in AIS. “People miss out on income from sovereign gold bonds or rental income under ?50,000, especially when no TDS is deducted,” cautioned Agrawal.
Misreporting or underreporting can lead to penalties ranging from 50 to 200 per cent of due tax and even prosecution if done wilfully.
5. Not Reporting Exempt Income
Even though some incomes—like PPF interest, EPF maturity, or agricultural earnings—are exempt, they must still be disclosed under Schedule EI in the ITR. “Non-reporting of such income may lead to a defective return,” warned Raj Lakhotia, Managing Partner, LABH & Associates.
6. Errors During Job Change
Switching jobs during a financial year brings a unique set of risks: duplicate deductions, missed TDS credits, or incorrect standard deduction claims.
“Both employers may allow exemptions separately, resulting in inflated deductions and underpaid taxes. Employees may be liable for advance tax and interest under Sections 234B and 234C,” noted Kumar.
Employees should consolidate all Form 16s, include final settlements and bonuses, and reconcile data with Form 26AS to avoid scrutiny.
7. Fraudulent or Faulty HRA Claims
In a crackdown last year, tax authorities uncovered cases where multiple employees used the same PAN to claim inflated HRA. Employees must provide rent agreements, receipts, and the landlord’s PAN (if rent exceeds ?1 lakh per annum). Falsifying documents may attract penalties up to 200 per cent of the amount misreported.
Key Deadlines You Cannot Miss:
1. 15 September 2025: Last date to file for non-audit taxpayers
2. 31 October 2025: Last date for audit cases
3. 31 December 2025: Deadline for belated or revised return
4. 31 March 2030: Last date for filing updated return for FY2024-25
Late filers face a penalty up to ?5,000 and 1 per cent monthly interest. Wilful evasion may attract imprisonment from 3 months to 7 years and fines under Section 276CC.
With increased digitalisation, data sharing between financial institutions and the tax department has become seamless. Taxpayers must ensure thoroughness while filing ITR this year. “It’s not about ticking boxes—it’s about ensuring every income stream, every deduction, every investment, and every employer is accurately accounted for,” Maheshwari summarised.
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