ITR Filing Mistakes That Cost ₹15L+ Earners a Notice (FY 2025-26)
Your Form 16 says your tax is settled. The Income Tax Department's AIS says otherwise — and for anyone earning ₹15 lakh or more, the gap between those two documents is exactly where the notices start. The salaried filing window for FY 2025-26 (AY 2026-27) closes on 31 July 2026, and the five mistakes below are the ones that turn a five-minute filing into a four-month notice cycle. Each one is avoidable in an evening.
Summary
| Mistake | What it triggers | What it costs you |
|---|---|---|
| Trusting Form 16 alone | AIS/26AS mismatch notice | ₹14,840 unpaid tax on a single ₹10L FD |
| Filing ITR-1 with capital gains | Defective return u/s 139(9) | Refile in 15 days or return is invalid |
| Skipping AIS reconciliation | Under-reporting notice u/s 270A | 50% of tax (200% if "misreported") |
| Missing the 31 July deadline | Belated return | ₹5,000 fee (234F) + interest + forced new regime |
| Not disclosing foreign RSUs (Schedule FA) | Black Money Act notice | Up to ₹10 lakh penalty |
The five that actually get you a notice
1. You trusted Form 16. Your AIS didn't.
Your employer can only tax what it pays you. It has zero visibility into your bank interest, dividends, capital gains, or rental income — so Form 16 is, by design, an incomplete picture for anyone with assets.
The classic trap: a ₹10 lakh fixed deposit at 7% throws off ₹70,000 of interest a year. Your bank deducts TDS at 10% — just ₹7,000. But at the 30% slab (every ₹15L+ earner), you actually owe ₹21,840 on that interest (30% plus 4% cess). The ₹14,840 shortfall is invisible on Form 16 and fully visible in your Annual Information Statement.
Do this: download your AIS and TIS from the e-filing portal and reconcile every line — interest, dividends, gains — against Form 16 before you file.
2. You picked ITR-1 with capital gains in the mix
ITR-1 (Sahaj) is capped at ₹50 lakh total income and allows no capital gains beyond a small long-term equity gain. One mutual-fund redemption, one RSU sale, any short-term gain, any capital loss you want to carry forward, or income above ₹50 lakh — and ITR-1 is off the table. You need ITR-2.
File ITR-1 anyway and the department flags it as a defective return under Section 139(9). You get 15 days to refile correctly; miss that and the return is treated as never filed — pushing you into belated-return territory (mistake 4).
Do this: pull the capital-gains statement from every broker and AMC. A single line means ITR-2.
3. You ignored the reconciliation — and the penalty isn't small
Under-reporting income isn't a slap on the wrist. Section 270A sets the penalty at 50% of the tax on the under-reported amount — and if the department classifies it as misreporting (which unexplained AIS mismatches often become), it jumps to 200%.
On the ₹14,840 of missed FD tax from mistake 1, that's a penalty of ₹7,420 to ₹29,680 — on top of the tax itself and the interest under Sections 234B and 234C for falling short on advance tax.
Do this: if an AIS entry is genuinely wrong, use the AIS feedback button to flag it before filing. Don't leave a mismatch unexplained.
4. You're treating 31 July as flexible
Miss the deadline and you file a belated return, which costs you three ways. First, a ₹5,000 late fee under Section 234F (₹1,000 only if total income is under ₹5 lakh — not you). Second, 1% per month interest under Section 234A on any unpaid tax. Third — and this is the expensive one — a belated return locks you into the new regime. If the old regime saved you ₹40,000 a year through HRA, Section 80C and home-loan interest under Section 24, that option vanishes the day you file late.
Do this: file by 31 July even if one number is still pending. You can revise the return until 31 March 2027 for FY 2025-26.
5. Your RSUs sit in a foreign brokerage you didn't disclose
If you hold foreign stock — MNC RSUs, an ESPP, a Vested or Interactive Brokers account — Schedule FA disclosure is mandatory whether or not you sold anything. This isn't an income-tax technicality; non-disclosure of foreign assets falls under the Black Money Act, where penalties can run to ₹10 lakh per year.
Do this: list every foreign holding in Schedule FA, including unsold ones, and report the foreign dividends in your income even after US withholding tax.
Real example: Salaried, ₹32L CTC, Bengaluru, RSUs + FD
Arjun filed ITR-1 in fifteen minutes off his Form 16. Here's what that rush actually cost him versus filing it right:
| Item | What he filed (rushed) | What it should have been |
|---|---|---|
| Form used | ITR-1 | ITR-2 (RSU sale + STCG present) |
| FD interest declared | ₹0 | ₹70,000 (AIS-matched) |
| Tax shortfall surfaced | Hidden | ₹14,840 |
| Penalty exposure (270A) | Ignored | ₹7,420–₹29,680 |
| Result | Defective-return notice in ~4 months | Clean return, zero notices |
The difference wasn't his income or his advisor. It was thirty minutes of reconciliation he skipped.
What to do this week
- Download AIS, TIS and Form 26AS from the e-filing portal and reconcile every entry against Form 16 — interest, dividends, capital gains, the lot.
- Pull capital-gains statements from every broker and AMC. One transaction means ITR-2, not ITR-1.
- Compute your tax under both regimes before filing — once you file belated or lock the wrong one, you're often stuck with it.
- File by 31 July, e-verify within 30 days (an unverified return counts as never filed), and only then call it done.
File once, file right
For a ₹15L+ earner, the cost of a careless ITR isn't the ₹5,000 fee — it's the ₹14,840 in surfaced tax, the 270A penalty stacked on top, and the four months of notices that follow. Every one of these five mistakes is caught by one honest evening with your AIS open next to your Form 16.
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