Most income tax notices do not come from tax evasion. They come from ordinary mistakes: the wrong form, an interest entry forgotten, a capital gain mis-dated, a bank account that was never validated. This guide lists the ten we see most often for AY 2026-27 and what to do about each.
Casela Advisors is a Chartered Accountant firm in Andheri East, Mumbai, and we file and correct returns for salaried individuals, investors and business owners every year. Rules, limits and due dates change, so treat figures here as a guide and confirm current rules before you file.
What this guide covers — at a glance
- AY 2026-27 covers income earned in FY 2025-26. Most mistakes come from reporting that income on the wrong form, in the wrong head, or without matching it to government records.
- The new regime is the default. If the old regime suits you better, you need to select it deliberately when you file, and compare both before choosing.
- AIS and Form 26AS are what the department sees. Income that appears there but not in your return is the most common trigger for notices.
- Capital gains and foreign assets need extra care. They decide which form you use and which schedules you must complete.
- Filing is not finished at submission. The return must be e-verified within the time allowed, and any tax due paid, or it is treated as not filed.
- Mistakes can be fixed. A revised or updated return is available, but it is cheaper and calmer to file correctly the first time.
01Start With the Right ITR Form
The first decision is the form, and it depends on your sources of income. The table shows the usual fit; always check the eligibility conditions for the year.
| Form | Usually for | Not for |
|---|---|---|
| ITR-1 | Resident individual with salary, one house property and other income up to the prescribed limits | No business income; long-term capital gains only within the narrow limit allowed |
| ITR-2 | Individuals and HUFs with capital gains, more than one house property, foreign assets or higher income | No business or professional income |
| ITR-3 | Individuals and HUFs with business or professional income | Books or detailed profit and loss usually needed |
| ITR-4 | Residents opting for presumptive taxation | Subject to turnover and income limits and no foreign assets |
02A Seven-Step Check Before You File
Most of the mistakes below disappear if you do this reconciliation first:
- 1Download AIS, TIS and Form 26AS. Compare every entry with your own records: salary, interest, dividends, sale of securities, rent and tax deducted.
- 2Match Form 16 with salary slips. If your employer's Form 16 differs from your records, resolve it before you file.
- 3Collect interest and dividend certificates. Savings accounts, fixed deposits, bonds, and dividends from shares and mutual funds are all taxable.
- 4Prepare capital gains statements. Get broker and mutual fund statements and compute gains lot by lot with correct dates and costs.
- 5Gather deduction proofs. Rent receipts for HRA, investment and insurance proofs, home loan certificate, donation receipts.
- 6List foreign assets and income. Foreign shares, bank accounts and RSUs are reported in Schedule FA and related schedules.
- 7Compare both tax regimes. Run the numbers under old and new regime before choosing, then file, pay any tax due and e-verify.
The new regime is the default. Rates, rebate limits and standard deduction differ between regimes and have changed in recent budgets, so use the figures in force for AY 2026-27 when you compare. Business income earners have additional conditions for switching.
03The Ten Mistakes
Each card below is a mistake, why it happens and what to do instead.
Filing on the wrong ITR form.
The form depends on your sources of income, not your preference. Capital gains beyond the narrow limit, foreign assets or business income push you to a different form, and a wrong form can make the return defective.
Ignoring AIS and Form 26AS mismatches.
Banks, brokers, registrars and employers report your transactions to the department. Income that appears there but not in your return invites a notice, even when the amount is small.
Choosing a tax regime without comparing.
The new regime is the default and has lower slab rates but fewer deductions. The old regime keeps deductions such as HRA and Section 80C. Work out both before deciding.
Leaving out interest and other income.
Savings interest, fixed deposit interest, dividends, rent and interest on tax refunds are taxable. Forgetting them because tax was already deducted is a frequent error.
Getting capital gains wrong.
Wrong purchase dates, missed brokerage and costs, mixing short-term and long-term, and forgetting to report transactions with no tax payable all lead to mismatches. Losses can be carried forward only if the return is filed on time.
Claiming deductions without proof.
HRA, home loan interest, Section 80C and 80D claims need documents. Claims you cannot support may be disallowed with interest and penalty.
Skipping foreign assets and income.
Foreign shares, RSUs, bank accounts and overseas income must be disclosed in the right schedules even if no tax is due. Non-disclosure carries serious penalties under the Black Money Act.
Wrong bank account or refund details.
Refunds are credited only to a validated bank account. A closed account, wrong IFSC or unvalidated account delays or loses the refund.
Not paying tax due or not e-verifying.
Self-assessment tax must be paid before filing, with interest for delay. A return that is not e-verified within 30 days of filing is treated as not filed.
Filing late or ignoring the due date.
Late filing attracts a fee and interest, and many carry-forward losses and some deductions are lost. File within the due date notified for your category.
04If You Have Already Filed with an Error
Do not wait for a notice. A revised return can generally be filed before the cut-off date for the assessment year, and an updated return is available later, subject to conditions and extra tax. Compare AIS again, correct the schedule that was wrong, pay any additional tax and interest, and e-verify the new return. If a notice has already arrived, respond within the time stated with supporting documents.
Foreign shares, RSUs and overseas accounts must be disclosed even when no tax is payable. Penalties under the Black Money Act can be severe, so check the schedule carefully or take advice before filing.
Filing with us
We prepare, reconcile and file returns, compare regimes, and fix errors in returns already filed. These are the services most often involved:
Return preparation, regime comparison and AIS reconciliation sit within our virtual CFO and accounting tax compliance practice.
Clean books and statements make filing faster; see outsourced bookkeeping.
Employers and business owners can keep deductions right through TDS return filing and payroll management.
Business owners filing alongside GST should see GST return filing.
Received a notice or filed in a hurry? Start through the contact page.
05Frequently Asked Questions
Which ITR form should I use for AY 2026-27?
It depends on your income sources. Salaried residents with simple income usually use ITR-1, those with capital gains or foreign assets usually use ITR-2, business or professional income needs ITR-3, and presumptive taxpayers use ITR-4. Check the eligibility conditions for the form before filing.
Which tax regime is better, old or new?
Neither is better for everyone. The new regime is the default with lower rates and fewer deductions. The old regime can be better if you claim large deductions such as HRA, home loan interest and Section 80C. Compare both with your actual figures.
What happens if I made a mistake after filing?
You can usually file a revised return before the cut-off date, and an updated return after that, subject to conditions and additional tax. Do it as soon as you spot the error.
Is it enough to file if my employer deducted all the tax?
No. Many people with only salary still need to file, and filing is needed for refunds, carrying forward losses and proof of income. Check the filing requirements for your income and age.
What if I receive a notice for a mismatch?
Do not ignore it. Check the notice, compare AIS and your return, and respond within the time given with supporting documents, or file a corrected return where appropriate.
06The Bottom Line
Return filing is mostly reconciliation. Match AIS and Form 16, choose the form and regime on facts, report every source of income and every foreign asset, pay what is due and e-verify. An hour spent before filing is cheaper than a notice afterwards.
Want Your Return Checked Before You File?
ITR Preparation • AIS Reconciliation • Regime Comparison • Capital Gains & Foreign Assets • Revised Returns & Notices
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