Key ITR Filing Mistakes to Avoid for AY 2026-27

Important transition note: AY 2026-27 (for income earned in FY 2025-26) is still filed under the Income Tax Act, 1961, even though the new Income Tax Act, 2025 came into effect on 1 April 2026. The new act applies only from Tax Year 2026-27 onwards (returns due in 2027).

This is one of the most confusing filing seasons in years. A new Income Tax Act has just kicked in, Budget 2026 has revised deadlines, capital gains rates changed and those new rates now fully apply, and the new tax regime remains the default. Miss any of these details, and you could get a notice, lose a refund, or pay more tax than you owe.

Key ITR deadlines for AY 2026-27

Common Errors Taxpayers Should Avoid While Filing ITR for AY 2026-27

• Confusing AY 2026-27 with Tax Year 2026-27– The new Income Tax Act, 2025 introduced the term “Tax Year” replacing “Assessment Year. Some tax preparers  are confusing the two. AY 2026-27 covers income earned in FY 2025-26 and is governed by the old Income Tax Act, 1961. Tax Year 2026-27 is income earned in FY 2026-27 under the new act, with returns due in 2027. If you’re filing in July 2026 for income earned up to 31 March 2026 — you are filing AY 2026-27 under the old act.
• Getting capital gains rates wrong– Budget 2024 changed equity STCG and LTCG rates from 23 July 2024 onwards. The old rates  no longer exist in ITR-2 for AY 2026-27 — those fields have been removed. The only applicable rates now are STCG at 20% and LTCG at 12.5% (above ₹1.25 lakh). The date-split reporting (before/after 23 July 2024) is also removed.
• Missing the new ITR-3/ITR-4 deadline extension– Budget 2026 extended the deadline for non-audit business and professional taxpayers filing ITR-3 and ITR-4 from 31 July to 31 August 2026. Many such taxpayers don’t know this and either rush unnecessarily in July, or — worse — assume the extension applies to them when it doesn’t (it doesn’t cover ITR-1 and ITR-2 filers, who still have 31 July).
• Not reconciling AIS and Form 26AS before filing- The Annual Information Statement now captures a much wider range of transactions — mutual fund purchases, high-value cash deposits, property registrations, foreign remittances. Mismatches between your ITR and the AIS are the number one trigger for automated notices. The department’s system flags these before a human even looks at your return. Log in at incometax.gov.in → AIS tab. Review every entry. If something is wrong, submit a feedback correction inside AIS itself before filing. Keep a record of what you disputed and why.
• Underreporting income, penalties are stricter now- Budget 2026 tightened the penalty structure. Genuine underreporting (honest mistake): 50% of tax on undisclosed income. Deliberate misreporting – up to 200% of the tax. With expanded AIS data, the department can now detect gaps in reported income far more easily than before — rental income, professional receipts, foreign income, interest
• Skipping e-verification after filing- An ITR filed but not verified within 30 days is treated as never filed. The 30-day rule continues for AY 2026-27 with no change. This is the single most avoidable mistake — the return is done, you think you’re finished, and you walk away without the two-minute e-verification step.

Tax laws change frequently, and the provisions applicable to AY 2026-27 sit at a unique intersection — the Income Tax Act, 1961 governs this return, even as the new Income Tax Act, 2025 has already come into force. Readers are advised to verify all figures, deadlines, and section references directly on the Income Tax Department’s e-filing portal at incometax.gov.in or consult a qualified Chartered Accountant before taking any action based on this article.