5 Costly ITR Filing Mistakes Salaried Employees Make That Can Delay Refunds and Trigger Tax Penalties
The current 2026–27 income tax return filing season is underway, and salaried employees are being warned about five common mistakes that can lead to penalties, interest, refund delays, and income tax notices. The article explains that in India’s fully digital tax system, almost every financial transaction can be tracked by the Income Tax Department, making accurate reporting essential.
The first major mistake is failing to inform a new employer about previous salary and tax details after switching jobs during the financial year. Employees are expected to share earlier income and TDS information properly so the new employer can calculate tax correctly. If this is ignored, the employee may receive excess tax benefits during the year, only to face a large tax shortfall and interest at the end.
The second mistake is making false or exaggerated declarations of tax-saving investments. Many employees submit expected investment details early in the year but later fail to provide actual proof. If documents are not submitted to payroll on time, the company can cancel the declaration and recover the tax due from later salary payments, often causing financial stress in February and March.
The third mistake is delaying the submission of required supporting documents. The article says employees often miss deadlines for documents linked to exemptions such as house rent allowance, leave travel concession, and home loan interest claims. Once the company’s cutoff date passes, these proofs may not be accepted, forcing employees to claim them later in their tax return. This can delay refunds and trigger additional scrutiny.
The fourth mistake is hiding income other than salary. Many salaried taxpayers rely only on Form 16 and forget to report savings account interest, fixed deposit interest, dividend income, freelance earnings, part-time income, and capital gains from shares or mutual funds. Even if some interest is exempt up to a limit, it still must be disclosed in the return under the proper head of income. Failing to do so can directly invite a tax notice.
The fifth and most critical mistake is not cross-checking the Annual Information Statement and Form 26AS before filing. These records contain details of investments, large cash transactions, securities trades, and TDS deducted in the taxpayer’s name. The article warns that even a small mismatch between the return and the official data can cause the system to mark the return as defective, delay refunds, and generate a demand notice.
The suggested solution is simple: plan investments and advance tax in advance, estimate income every few months, pay any required tax on time, and verify all statements before filing. The article concludes that accurate tax filing is not just a yearly formality but a reflection of financial discipline and personal responsibility.
