Filing your Income Tax Return (ITR) may seem routine, but even small mistakes can result in paying significantly more tax than necessary. According to a recent survey by 1 Finance, nearly 68% of IT professionals lost an average of ₹49,094 in potential tax savings due to poor planning and common filing errors. Whether you file your ITR through a Chartered Accountant (CA) or on your own, it’s essential to avoid these frequent missteps that silently drain your income.
One of the most common mistakes is selecting the wrong tax regime—Old vs. New—without proper evaluation.
Old Regime: Allows exemptions like HRA, 80C (PF, ELSS, LIC), 80D (health insurance), etc.
New Regime: Offers lower slab rates but no major deductions.
Many taxpayers blindly opt for the new regime without comparing it to the old one, leading to higher tax outgo. Sometimes, people stick with the default regime set by their employer or file in haste without consulting a tax advisor.
Even those who opt for the old regime often fail to claim full deductions due to:
Incorrect HRA claims: Errors in rent receipts or employer documentation can invalidate the exemption.
Underutilizing 80C: Not investing in tax-saving instruments like ELSS, PPF, or life insurance on time, resulting in partial use of the ₹1.5 lakh limit.
Missing out on Corporate NPS: Many are unaware that Corporate NPS not only builds a retirement corpus but also provides an additional ₹50,000 deduction under 80CCD(2), on top of the 80C limit. Ignoring this means missing dual benefits—tax savings and retirement planning.
Several legal oversights can lead to interest, penalties, or tax notices:
TDS on Rent: If you're paying rent above ₹50,000/month, you must deduct and deposit TDS. Failure to do so can result in 1–1.5% interest per month and a penalty of ₹200/day.
Advance Tax Misses: If your tax liability exceeds ₹10,000 in a year and you don’t pay advance tax on time, you'll incur 1% monthly interest under Section 234B/234C.
Wrong ITR Form: Around 31% of professionals have multiple income sources (salary + freelancing), yet they choose the wrong ITR form or miss declaring income.
Crypto Gains Ignored: 15% of respondents held cryptocurrency, but many failed to report capital gains accurately, which can invite scrutiny or penalties.
Many people wait until March to start tax planning. This rush leads to poor investment decisions and missed benefits. Tax planning should be a year-long exercise, not a last-minute scramble.
✅ Compare tax regimes annually
Don’t blindly choose the same regime every year. Analyze your income, deductions, and exemptions to decide what suits you best.
✅ Explore Corporate NPS
Check if your employer offers Corporate NPS. It’s an underrated tool that helps save more tax and secures your retirement.
✅ Avoid Haste – Start Early
Don’t delay your investments till March. Regular monthly planning can help optimize benefits and reduce stress.
✅ Consult a Tax Advisor
Even one session with a financial planner can reveal deductions and tax-saving opportunities you may not be aware of.
Tax filing isn't just about submitting a form—it's about optimizing your finances. For IT professionals, where salary structures are often complex and variable, a minor mistake can mean major tax loss. Avoid these pitfalls, stay updated, and plan throughout the year to make the most of every rupee.
