The 31 July due date for filing income tax returns (ITRs) is nearly here. Taxpayers who do not have income from business or profession must complete the exercise in the next few days. Yet, speed should not come at the expense of accuracy.Tax consultants warn that several less-understood aspects—from Annual Information Statement (AIS) mismatches and F&O reporting errors, to foreign asset disclosures—can result in notices, higher taxes or loss of legitimate benefits. Here’s a guide to the issues that require a final inspection before you click ‘submit’.Know your ITR filing deadlinesOriginal due date:31 July 2026*Due date for filing belated return: 31 December 2026Deadline for filing revised return: 31 March 2027*For taxpayers without income from business or profession, using ITR-1 or ITR-2; salaried individuals with income from F&O or intra-day trading have time till 31 August.The belated filing consequencesLate filing fees of Rs.5,000Restricted to Rs.1,000 if your income is below Rs.5 lakhChoice of old regime not availableNo carry forward of business or capital lossesInterest could be levied on taxes dueThe final chance
AIS is not infallibleSince its introduction in 2021, the role of the AIS in ITR filing has grown sharply. Put simply, it is a record of your financial transactions during the year, as well as the taxes deducted by and deposited with the income tax department, among other details. It can be accessed through the income tax e-filing portal (incometax.gov.in).While tallying your Form-16, bank statements, mutual fund statements and so on with your AIS is crucial now, it does not mean the statement should supersede your records in case of a mismatch. “There are instances where transactions are reported by multiple entities, classified differently from the taxpayer’s records, reflected in a different reporting period, or attributed incorrectly. As a result, taxpayers need to carefully evaluate whether amounts appearing in the AIS are accurate or not,” says Amarpal Chadha, Tax Partner, EY India.Taxpayers must also closely review and reconcile capital gains reported in the AIS with statements from their fund houses, brokers, and other intermediaries. “That is, especially where investments are held across multiple brokers, mutual funds and securities platforms, or where corporate actions have impacted the computation of gains during the year,” Chadha adds.Take note of missed income, duplicate transactions in AISChartered accountant Himank Singla, Partner, SBHS Associates, points out that in many cases, savings bank interest and fixed deposit interest are either not reported in the AIS or reported incorrectly. “Many taxpayers tend to assume that if an income does not appear in the AIS, it need not be reported in the ITR. This is a misconception,” he says. Likewise, mutual fund transactions could be reported twice, once by the broker and again by registrar and transfer agents (RTAs) such as CAMS or KFin Technologies.At your end, you must tally your bank statements, mutual fund statements, interest certificates and Form 26As with the AIS before filing your return. “Taxability is governed by the provisions of the Income Tax Act and not by the contents of the AIS, which is only an information and reconciliation tool. It should not be treated as the sole basis for filing the return. The ultimate responsibility of correctly computing and reporting income continues to rest with the taxpayer,” explains Singla.For mutual fund transactions, he recommends relying on capital gains statements generated by registrars CAMS and KFin Technologies, which provide a consolidated record of transactions for fund houses.Another discrepancy that chartered accountants often flag pertains to transactions involving jointly owned immovable properties. “The AIS now provides details such as transaction value, assigned amount and party count. However, in several cases, the data uploaded by the registering authorities contains incorrect party count or wrongly allocates the sale consideration to one co-owner,” Singla points out.Consider a case in which a property jointly owned by two individuals is sold for Rs.40 lakh. “The AIS of one co-owner may incorrectly reflect the entire Rs.40 lakh instead of only his or her respective share. In such situations, taxpayers should submit feedback in the AIS mentioning the permanent account number (PAN) of the other co-owner(s) and their respective ownership shares. This simple step can help prevent unnecessary mismatch notices from the I-T department,” he adds.“The key challenge noticed this year is the application of a higher surcharge on capital gains from unlisted shares reported in Schedule PTI (Pass Through Income), instead of applying the prescribed surcharge cap of 15%,” says Rupali Ashar, partner at advisory firm Legacy Growth.Misclassification of buyback under the wrong head of income in the AIS is another challenge. “While one can edit incorrect numbers in the AIS, the portal still does not allow you to fix the wrong income category,” she adds. For any discrepancy you notice in the AIS, ensure that you use the feedback option on the income tax portal and flag the mismatch well before filing your return.NRIs, understand deemed residency rulesBesides the residency test, where a taxpayer’s residential status is determined by the number of days spent in India, nonresident Indians (NRIs) must keep in mind the deemed residency provision introduced in 2020. Under this rule, an Indian citizen whose income from India exceeds Rs.15 lakh in a financial year and who is not liable to pay tax in any other country is deemed to be a resident of India for tax purposes, subject to conditions.Consider an Indian citizen who resides in the United Arab Emirates, which does not levy personal income tax. “In such a case, a taxpayer, though he stays in the UAE for more than 183 days, may still be treated as a tax resident of both countries. This is where the tie-breaker rule of double taxation avoidance agreements (DTAAs) comes into play. They help resolve this overlap by determining the country of tax residence,” says chartered accountant Ashish Karundia, Founder, Ashish Karundia and Co.This would be based on factors such as the location of the permanent home, the country where the personal and economic ties are stronger, habitual abode and nationality. “For instance, if the taxpayer has been living and working in the UAE for many years, the taxpayer can be treated as a tax resident of the UAE rather than India, as the tiebreaker residence rule may favour the UAE. So, the taxpayer would be a non-resident in the context of Indian tax laws and, hence, would be able to claim treaty benefits such as exemption on mutual fund capital gains,” points out Karundia.Dabbled in F&O? Choose ITR-3Capital gains, as seen nearly every year, poses challenges for taxpayers and chartered accountants this filing season as well.Amit Maheshwari, managing partner at chartered accountancy firm AKM Global says misreporting futures and options (F&O) and intra-day trades as capital gains instead of business income is a frequent challenge. “This critical misclassification leads to filing the wrong form (ITR-2 instead of ITR-3).”’And if ITR-3 is the form relevant for you, the due date will be 31 August 2026.While the I-T Act, 2025 came into effect from 1 April 2026, the current return-filing exercise pertains to financial year 2025-26. Hence, it is governed by the I-T Act, 1961.“These areas have led to considerable confusion, particularly among individuals with multiple sources of income or investment transactions,” he adds.Use foreign assets information to rectify past omissionsThe I-T department has embedded information on foreign assets and income—received through information exchange mechanisms with other countries—for calendar years 2022, 2023 and 2024.This does not mean taxpayers filing returns for assessment year 2026-27 (financial year 2025-26) will not find the information useful. “If they come across a previously undisclosed dormant account they maintained while they were abroad, or an account in which they were a beneficiary or had signing authority, or any other foreign asset/ income, they should disclose the same while filing this year’s return,” says Karundia.Moreover, taxpayers who have invested in overseas funds via the GIFT City route have had to grapple with uncertainty over whether such investments need to be disclosed under Schedule FA (Foreign Assets).According to Karundia, however, GIFT City is treated as a foreign jurisdiction only under the Foreign Exchange Management Act (FEMA). “Under the I-T Act, taxpayers investing in, say, outbound feeder funds offered through this route need not treat the gains or any other income as foreign income or the investments as foreign assets.”However, this remains a grey area in the ongoing tax-return-filing season.Your last-minute guide to filing error-free returnsDon't rely solely on the AIS; check your records, maintain proofs to back your claims.Flag discrepancies in the AIS using the feedback option on I-T portal.Report all income, like savings and FD interest, even if missing from the AIS.Use the new details in the AIS—foreign asset and income information—identify and rectify past omissions, if any.Check for duplicate entries: mutual fund transactions could be reported multiple times by brokers, RTAs.Indian citizen with Indian income above Rs.15 lakh? Assess residential status, DTAA benefits carefully.Resident and ordinarily resident (ROR) taxpayers must disclose foreign income, assets.Late filing comes at a costIf you fail to complete the process by 31 July, you can file belated returns by 31 December, but not without major repercussions.“For one, you will not be able to opt for the old tax regime—the new, default regime will become mandatory. You will also not be allowed to carry forward business losses and capital losses (which can be set off against income earned in subsequent years),” points out Ashar. That is apart from having to fork out late-filing fees of Rs.5,000 (Rs.1,000 if your income is less than Rs.5 lakh). “Further, where taxes remain payable, a delay in filing the return may result in interest being levied until the return is filed and the tax dues are discharged,” notes Chadha.If you spot any errors or omissions in your original or belated return, you can revise the same by 31 March 2027.Should you miss the 31 December 2026 deadline too, you still have the option of filing updated returns (ITR-U), which will entail the payment of additional tax (see graphic 1). This option allows you to voluntarily disclose omitted income or correct errors, and can be filed within four years from the end of the relevant assessment year.Finally, once you submit your returns online, do not forget to verify them. You can do so through several electronic modes, such as Aadhaar- OTP, net banking, and demat account, among others.
