ITR Filing for Salaried Employees: 10 Mistakes I See Every Year in My Practice
I file ITRs for over 200 salaried employees every year. After 15 years of doing this, I can tell you the same 10 mistakes repeat across clients. Let me list them so you can avoid them.
MISTAKE 1: NOT RECONCILING FORM 26AS WITH ACTUAL TDS
Your employer deducts TDS but sometimes the amount in Form 26AS does not match your Form 16. This happens when TDS is deducted but deposited late, or there is a PAN mismatch in the TDS return. Always compare before filing.
MISTAKE 2: MISSING INTEREST INCOME
Savings account interest, FD interest, RD interest — all taxable. Banks deduct TDS on FD interest above Rs 40,000 (Rs 50,000 for seniors) but the FULL interest is taxable, not just the amount above the threshold. Many people only report what shows in 26AS and miss interest where no TDS was deducted.
MISTAKE 3: NOT CLAIMING SECTION 80TTA/80TTB
Section 80TTA allows deduction up to Rs 10,000 on savings account interest (Rs 50,000 for senior citizens under 80TTB). This is different from the Rs 40,000 TDS threshold. Many salaried employees forget to claim this.
MISTAKE 4: WRONG ITR FORM
Salaried employees with only salary + house property + other sources should file ITR-1 (Sahaj). But if you have capital gains (from mutual fund redemption, share sale, property sale), you must use ITR-2. Filing wrong form leads to defective return notice.
MISTAKE 5: NOT REPORTING EXEMPT INCOME
Even though EPF interest (up to Rs 2.5 lakh contribution), PPF interest, and long-term capital gains below Rs 1.25 lakh are exempt — they should still be reported in the Exempt Income schedule. Not reporting them can trigger a mismatch notice.
MISTAKE 6: CLAIMING HRA WITHOUT PROPER DOCUMENTATION
If you claim HRA exemption, you must have: rent receipts, landlord PAN (if annual rent exceeds Rs 1 lakh), and the rent payment should ideally be through bank transfer. Cash rent above Rs 1 lakh without landlord PAN is an invitation for scrutiny.
MISTAKE 7: NOT REPORTING ALL BANK ACCOUNTS
ITR forms require you to list ALL bank accounts held during the year (except dormant accounts closed 3+ years ago). Omitting accounts can trigger a mismatch with information the department already has from your banks.
MISTAKE 8: INCORRECT HOUSE PROPERTY INCOME
If you have a home loan, the interest deduction goes under House Property income (not under deductions). Many people put it under Section 80C by mistake. Also, if you have a second house, notional rental income must be computed even if it is vacant.
MISTAKE 9: NOT FILING ON TIME
Due date for salaried employees: July 31. Late filing after July 31 means: no carry forward of losses (except house property loss), late filing fee of Rs 5,000 (Rs 1,000 if income below Rs 5 lakh), and interest under Section 234A.
MISTAKE 10: NOT VERIFYING THE ITR
Filing is not complete until you e-verify (Aadhaar OTP, net banking, or DSC) or send the signed ITR-V to CPC Bengaluru within 30 days. Unverified returns are treated as not filed.
MISTAKE 1: NOT RECONCILING FORM 26AS WITH ACTUAL TDS
Your employer deducts TDS but sometimes the amount in Form 26AS does not match your Form 16. This happens when TDS is deducted but deposited late, or there is a PAN mismatch in the TDS return. Always compare before filing.
MISTAKE 2: MISSING INTEREST INCOME
Savings account interest, FD interest, RD interest — all taxable. Banks deduct TDS on FD interest above Rs 40,000 (Rs 50,000 for seniors) but the FULL interest is taxable, not just the amount above the threshold. Many people only report what shows in 26AS and miss interest where no TDS was deducted.
MISTAKE 3: NOT CLAIMING SECTION 80TTA/80TTB
Section 80TTA allows deduction up to Rs 10,000 on savings account interest (Rs 50,000 for senior citizens under 80TTB). This is different from the Rs 40,000 TDS threshold. Many salaried employees forget to claim this.
MISTAKE 4: WRONG ITR FORM
Salaried employees with only salary + house property + other sources should file ITR-1 (Sahaj). But if you have capital gains (from mutual fund redemption, share sale, property sale), you must use ITR-2. Filing wrong form leads to defective return notice.
MISTAKE 5: NOT REPORTING EXEMPT INCOME
Even though EPF interest (up to Rs 2.5 lakh contribution), PPF interest, and long-term capital gains below Rs 1.25 lakh are exempt — they should still be reported in the Exempt Income schedule. Not reporting them can trigger a mismatch notice.
MISTAKE 6: CLAIMING HRA WITHOUT PROPER DOCUMENTATION
If you claim HRA exemption, you must have: rent receipts, landlord PAN (if annual rent exceeds Rs 1 lakh), and the rent payment should ideally be through bank transfer. Cash rent above Rs 1 lakh without landlord PAN is an invitation for scrutiny.
MISTAKE 7: NOT REPORTING ALL BANK ACCOUNTS
ITR forms require you to list ALL bank accounts held during the year (except dormant accounts closed 3+ years ago). Omitting accounts can trigger a mismatch with information the department already has from your banks.
MISTAKE 8: INCORRECT HOUSE PROPERTY INCOME
If you have a home loan, the interest deduction goes under House Property income (not under deductions). Many people put it under Section 80C by mistake. Also, if you have a second house, notional rental income must be computed even if it is vacant.
MISTAKE 9: NOT FILING ON TIME
Due date for salaried employees: July 31. Late filing after July 31 means: no carry forward of losses (except house property loss), late filing fee of Rs 5,000 (Rs 1,000 if income below Rs 5 lakh), and interest under Section 234A.
MISTAKE 10: NOT VERIFYING THE ITR
Filing is not complete until you e-verify (Aadhaar OTP, net banking, or DSC) or send the signed ITR-V to CPC Bengaluru within 30 days. Unverified returns are treated as not filed.
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Disclaimer: This content is the author's personal opinion and analysis. It does not constitute professional tax or legal advice. Consult a qualified professional for specific advice on your situation.
Comments (9)
Mistake 10 about e-verification is so basic but I know people who forgot and their return was treated as not filed 😬
Good list. I would add — also report foreign assets if you have any. Schedule FA in ITR-2 catches people who have even a small international mutual fund investment.
Mistake 5 is debatable. Not all exempt income needs reporting — only specific categories.
Number 6 about HRA documentation — this triggers scrutiny more than anything else.
The Form 26AS reconciliation — I make every client do this before I start their ITR. Non-negotiable.
Amit, mistake number 6 about HRA documentation is the one I see causing the most scrutiny. Always pay rent by bank transfer and get landlord PAN if rent exceeds Rs 1 lakh per year.
Clean list. Forwarding to friends.
Mistake 4 about wrong ITR form — saw this happen to my cousin
HRA scrutiny is real. Always use bank transfers.