Mitali
These are the main mistakes that commonly prevent Income Tax Returns from being processed, resulting in delays or stoppage of refunds.
Claiming Incorrect House Rent Allowance
Many taxpayers claimed House Rent Allowance (HRA) directly under other allowances instead of using the new HRA schedule (13A) in the ITR form.
Details required for HRA exemption are - city, rent paid, basic salary breakup and amount received, then calculate the eligible exemption (the least of actual HRA received, i.e. 40%-50% of basic salary or rent paid minus 10% of salary).
For Wrong ITR Form Selection
Many filers select the wrong ITR form, such as filing ITR-1 despite having income like winnings, shares or mutual funds, which require ITR-2 or ITR-3.
Incorrect Allowance Claims under Old/New Regimes
Salaried taxpayers mistakenly claim all old regime allowances (HRA, dress, education, etc.) under the new regime, which only allows select exemptions (not HRA, 10(4) special allowances, etc.).
The standard deduction for the new regime Rs 75,000 versus old Rs 50,000 can help you to check which regime you have chosen.
Section 80CCD(2) Calculation Errors
Most of the taxpayers directly claim 80CCD(2) without showing a correct salary breakup (Basic + DA). They consider entire gross salary for claiming the employer contribution under 80CCD(2), instead of just basic salary plus DA which creates error.
Only 14% of basic + DA is eligible, not the total salary.
Artificial Lowering of Income for Refunds
Some filers add wrong deductions or allowances to keep taxable income:
- Rs 4,99,000 (Old regime rebate limit)
- Rs 6,99,000 (New regime rebate limit)
to claim 100% refund of TDS.
This triggers red flags and impacts are:
- ITR gets paused / red-flagged
- Refund is not issued
- You may receive a notice
Winning Income Taxed Incorrectly
Winnings should be taxed at a flat 30% under Section 115BBJB, not normal slab rates; claiming refunds against TDS on winnings by using slab rates is wrong.
The return must show the correct head (“other sources”) and follow the proper schedule.
Wrong Form Selection Despite Investment/Share Income
Reporting share/mutual fund winnings in AIS but filing ITR-1 instead of ITR-2/ITR-3. ITR-1 is only for simple salary + interest income.
Capital gains automatically make ITR-1 invalid, and the return gets flagged as defective u/s 139(9).
Documentation and Schedule Errors
Failing to keep proper bills for travel/conveyance allowances, or entering incorrect data about salary components or deductions, leads to disallowances and return defects.
Claims for transport allowance for the blind or handicapped must be genuine; false claims without disability may invite rejection.
Steps to Fix Errors
Revise returns if errors are found before the deadline (31 December 2025); post-deadline revision will incur 25% additional tax.
Conclusion
Taxpayers must carefully check their ITR filings as incorrect claims, wrong regime usage and mismatches with AIS are the main reasons ITRs are being held, red-flagged, or not processed; notices may be issued.
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