Filing your income tax return is not only about meeting deadlines. Small mistakes can cost you money or even bring a notice from the Income Tax Department. Many taxpayers repeat the same errors year after year. The good news is, these mistakes are easy to avoid if you know them in advance.
This guide will show you the most common income tax mistakes and how to stay clear of them.
1. Missing the Deadline
One of the most common mistakes is late filing. If you file after the due date:
- You pay a late fee under section 234F.
- You lose the option to carry forward certain losses.
- You may face interest on unpaid taxes.
File early to avoid last-minute problems with the portal.
2. Choosing the Wrong Tax Regime
India has two regimes: old and new.
- The old regime gives you deductions like section 80C, 80D, and housing loan interest.
- The new regime has lower tax rates but fewer deductions.
If you are confused, read our detailed guide on Old Tax Regime vs New Tax Regime. Compare both before you file.
3. Ignoring Section 80C Benefits
Many taxpayers forget to claim the popular 80C deduction. You can save up to โน1.5 lakh in a year by investing in:
- Public Provident Fund (PPF)
- Employee Provident Fund (EPF)
- Tax-saving Fixed Deposits
- ELSS Mutual Funds
- Life insurance premiums
Read our complete Section 80C Guide to use this benefit fully.
4. Not Claiming NPS Contributions
The National Pension System (NPS) is a strong tax-saving tool. Many people miss two important parts:
- Employee contribution under 80CCD(1) + 80CCD(1B)
- Employer contribution under 80CCD(2)
Both give you extra deductions beyond 80C. Learn more about:
5. Forgetting Health Insurance Deduction under 80D
Medical costs are rising. Section 80D allows you to save tax on health insurance premiums.
- Up to โน25,000 for self, spouse, and children.
- Extra โน25,000 for parents (โน50,000 if parents are senior citizens).
See our guide on Section 80D and Health Insurance.
6. Errors in Reporting Multiple Incomes
If you earn from:
- Salary
- Freelancing or side business
- House property rent
- Savings account or fixed deposit interest
You need to report all of them. Many forget interest income from banks, which often results in notices.
7. Ignoring TDS and Form 26AS
Always match the tax deducted at source (TDS) with your Form 26AS. If you skip this, you may claim less refund or face mismatch issues.
8. Not Claiming Housing Loan Benefits
If you have a housing loan, you get benefits under section 24(b) and section 80EEA.
- Section 24(b): Up to โน2 lakh deduction on interest.
- Section 80EEA: Extra โน1.5 lakh for affordable housing.
This can reduce your taxable income by a large margin.
9. Overlooking Multiple Taxation Issues
Many people feel taxed at every stage of spending. You pay income tax on your salary, GST when you buy goods, road tax when you buy a car, toll tax when you drive. This is called multiple taxation.
We explained this in detail here: Multiple Taxation in India Explained.
10. Relying Only on Last-Minute Investments
Rushing at the end of the year leads to poor decisions. You may lock your money in products that do not suit your goals. Instead, plan investments early and spread them across the year.
How to Avoid These Mistakes
- File your return on time.
- Compare old and new regime before choosing.
- Use all available deductions like 80C, 80D, NPS, housing loan.
- Keep track of all income sources.
- Match your TDS with Form 26AS.
- Plan investments early, not in March.
Final Thoughts
Income tax is not only about filing forms. Small errors reduce your savings and increase stress. With awareness and planning, you can avoid mistakes and make better financial decisions.
Support us by searching โeasytaxcalculator.inโ on google
