Filing your income tax return is not the end of your responsibility. More than 2 crore taxpayers received defective ITR notices last year for simple mistakes that could have been avoided, wrote Chandralekha MR, founder of Dime, in a LinkedIn post.
Of the 7 crore ITRs filed for AY 2024-25, only 5.34 crore were processed successfully. Over 1.65 lakh cases were flagged for detailed scrutiny, according to the data she cited.
“These aren’t complex tax evasion cases,” Chandralekha noted. “These are regular people who made simple, critical mistakes after filing.”
She outlined three common errors:
1. Failing to e-verify
Around 32 lakh taxpayers filed ITRs but never e-verified them as of August 2024. Without e-verification within 30 days, returns are treated as invalid, refunds vanish, and penalties of up to ₹5,000 may apply.
2. Ignoring AIS mismatches
The Annual Information Statement (AIS) often reflects slightly different figures than what taxpayers enter. For instance, a dividend of ₹50,000 in a bank statement may appear as ₹55,000 in AIS, since TDS is included. Even small mismatches can trigger notices. In one case, a taxpayer was flagged for income from a company in which he held no shares-it took six months to resolve.
3. Selecting the wrong ITR form
Choosing a simpler form like ITR-1 while reporting capital gains or other ineligible income automatically makes the return invalid. Chandralekha highlighted the case of a Mumbai taxpayer who under-reported 50% of his income and faced a ₹1.46 lakh penalty. Misreporting can invite penalties of up to 200%.
Chandralekha stressed that an ITR is not just paperwork but a legal document that affects refunds, compliance history, and potential penalties for years.