Summary: The content states that the Income Tax Return filing deadline for FY 2025-26 is 31 July 2026 for salaried individuals and 31 August 2026 for non-audit businesses and professionals, and explains that many returns are flagged due to discrepancies between the return and information available with the Income Tax Department through sources such as the Annual Information Statement (AIS), Form 26AS and pre-filled data. It identifies seven common reasons for notices: mismatch between AIS and the ITR, unreported capital gains, high-value transactions not matching declared income, incorrect or mismatched TDS claims, non-reporting of foreign assets or bank accounts in Schedule FA, omission of interest income, and use of an incorrect ITR form. The content also outlines the applicability of ITR-1, ITR-2, ITR-3 and ITR-4 based on the taxpayer’s income profile. It concludes that taxpayers should compare AIS and Form 26AS with their own records and ensure accurate reporting before filing to minimise discrepancies.
INTRODUCTION
The deadline for filing Income Tax Returns (ITR) for the financial year 2025-26 is 31 July 2026 for (salaried individuals), and August 31, 2026 for (non-audit businesses and professionals). Every year, a significant number of returns are flagged—not because of any fraudulent activity, but due to discrepancies between what is reported and what the tax department already knows from third-party sources. With the use of the Annual Information Statement (AIS) and pre-filled data, most issues are now detected, which has increased the chances of accidental mismatches. Here are the seven most common reasons your ITR might receive a notice, along with ways to avoid them before submitting your return.
1. Mismatch Between AIS and ITR
The AIS now includes almost all financial activities, such as salary, savings interest, dividend payouts, mutual fund transactions, and high-value credit card spending. If the figures in your ITR do not match what has been reported by banks, employers, or registrars, a notice is likely. The solution is simple—check your AIS before starting your ITR filing, not after.
2. Unreported Capital Gains
This is one of the most common and avoidable reasons for a notice. If you sell shares, mutual fund units, or property and do not report the gain, even a small one, it will be detected because brokers and registrars directly report these transactions to the tax department. Even a gain from redeeming a mutual fund must be declared. The issue is not the amount but the omission.
3. High-Value Transactions Without Matching Income
Large cash deposits, big credit card purchases, or a property purchase that does not match the income you have declared can draw attention. The department has set reporting limits for such transactions. If your ITR shows income much lower than your spending pattern suggests, you may receive a query asking you to explain the difference.
4. Incorrect or Mismatched TDS Claims
Claiming a TDS credit that does not match the details in your Form 26AS or AIS is common problem. This is often not your fault if the deductor (your employer or client) enters your PAN incorrectly. Cross-check all TDS entries against your Form 26AS before filing your return.
5. Not Reporting Foreign Assets or Bank Accounts
If you have foreign bank accounts, overseas investments, or income from abroad, you must declare this in Schedule FA, regardless of the amount. Failing to disclose this is taken very seriously as it falls under strict reporting requirements.
6. Missing Interest Income
Interest income from savings accounts, fixed deposits, and recurring deposits is taxable and is now directly reported by banks to the department. It is easy to overlook small amounts, like a few hundred rupees of interest or an FD that matured midyear. These are exactly the entries that the AIS pre-fills and automatically cross-checks.
7. Using the Wrong ITR Form
Using the wrong form can render your return defective, forcing a refile under a tight deadline. Here’s a quick guide to which form applies to you:
1. ITR-1 (SAHAJ) – For individuals being a resident (other than not ordinarily resident) having total income upto Rs.50 lakh and having Income from Salaries, two house properties, other sources (Interest etc.), long-term capital gains under section 112A up to Rs. 1.25 lakh, and agricultural income up to Rs.5 thousand
2. ITR-2 – This return is applicable for Individual and Hindu Undivided Family (HUF) Having Income under any head other than Profits and Gains of Business or Profession. Who is not eligible to file ITR-1.
3. ITR-3 – Applicable for Individual and HUF. Having Income under the heads Salary/Pension, House Property, Profits or Gains of Business or Profession, Capital Gains or Income from Other Sources. Who is not eligible to file ITR-1, ITR-2 or ITR-4.
4. ITR-4 – This return is applicable for an Individual or Hindu Undivided Family (HUF), who is Resident other than Not Ordinarily Resident or a Firm (other than LLP) which is a Resident having Total Income under Business or Profession which is computed on a presumptive basis (u/s 44AD / 44ADA / 44AE of Income Tax Act,1961) and income from any of the following sources:
Salary / Pension, One House Property, Other sources (Interest, Family Pension, Dividend etc.), Agricultural Income up to ₹ 5,000, Capital Gain income u/s 112 A (Income Tax Act,1961) up to ₹ 1,25,000
CONCLUSION
The deadline for filing Income Tax Returns (ITR) for the financial year 2025-26 is 31 July 2026 for (salaried individuals), and August 31, 2026 for (non-audit businesses and professionals). As a result, taxpayers are receiving more notices because there are differences between the information they provide in their returns and the pre-filled data from sources like the Annual Information Statement (AIS) and Form 26AS. This article outlines the seven most common causes of such discrepancies, including unreported capital gains, foreign assets, incorrect Tax Deducted at Source (TDS) claims, and choosing the wrong ITR form. It is important to be aware of these issues before filing your return to avoid problems later on. The most effective way to prevent compliance issues this season is to compare the data from AIS and Form 26AS with your own records before submitting your ITR.
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