Filing season last year, I did everything I was supposed to. Downloaded Form 26AS, matched TDS with Form 16, entered capital gains from my broker's tax P&L. Filed before July 31, got my acknowledgement, thought I was done.

August. Defect notice from IT department.

Turned out my AIS had an SFT-018 entry for a mutual fund redemption from a folio I'd forgotten about — an old ELSS fund I'd started in 2018, finally hit the 3-year lock-in, and later redeemed. The redemption value was about ₹85,000. I'd completely forgotten this folio existed. It wasn't in the capital gains statement my broker sent me because it was with a different AMC.

The AIS had the entry. My ITR didn't declare it. System flagged it as underreported income.

To fix it I had to file a revised return, which meant going back through the whole process, recalculating gains (purchase NAV vs redemption NAV, LTCG above ₹1L at that time), paying the shortfall tax plus interest under 234A and 234B.

What I should have done: downloaded my AIS before filing and read every SFT entry, not just the TDS entries. Form 26AS didn't have this. AIS did.

**How to get your AIS:** [incometax.gov.in](http://incometax.gov.in) → login → AIS/TIS tab → download PDF. Password: your PAN in lowercase + date of birth in DDMMYYYY format. So if PAN is ABCDE1234F and DOB is 5 March 1985, password is abcde1234f05031985.

What to specifically look for in the SFT section:

Cross every SFT entry against your own records. If you have investments scattered across platforms, this is where the gaps show up.

July 31 is less than 4 weeks away. If you haven't looked at your AIS yet — do it before you file, not after.

Happy to answer questions if anyone has specific AIS entries they're confused about.

Filing your own ITR this year is a good call. But small errors can invite big consequences, including scrutiny notices, a 50% penalty on underreported income, or a refund that never arrives.

Here are 10 mistakes to avoid before you hit submit.

1. Picking the wrong ITR form

Not all taxpayers can file ITR-1.

• Only salary income and one house property: ITR-1
• Capital gains, F&O trading, multiple houses: ITR-2 or ITR-3

Filing the wrong form results in a defective return notice. You get 15 days to fix it. Miss that and your return is treated as invalid.

2. Not cross-checking Form 26AS and AIS

Form 26AS shows your TDS, TCS, and advance tax paid. AIS goes further and captures interest income, dividends, capital gains, and high-value transactions.

If your ITR does not match either document, it can trigger a notice automatically.

The penalty for underreporting income is 50%. For misreporting, it goes up to 200%.

3. Skipping income sources you think are small or exempt

Every income source needs to be reported, even if tax is not due on it.

• Savings account interest, FD interest, rental income, freelance payments
• Capital gains from stocks, mutual funds, and any foreign income
• Even fully exempt income like PPF interest goes under Schedule EI

Omissions here are easy for the system to catch through AIS.

4. Wrong bank account details

Your refund can only be credited to a pre-validated bank account. One wrong digit in the IFSC or account number and your refund gets rejected or delayed indefinitely.

Check both fields twice. Also verify your e-filing account has a valid nominee set up.

5. Filing but not verifying

Submitting the ITR is not the final step. You must e-verify it within 30 days of filing.

Options include Aadhaar OTP, net banking, DSC, or bank ATM.

An unverified ITR is treated as if it was never filed at all.

6. Getting capital gains rates wrong for FY 2025-26

The rates changed after Budget 2024 and many people are still applying the old ones.

• STCG on listed equity: 20% flat under Section 111A
• LTCG on listed equity: 12.5% above ₹1.25 lakh under Section 112A
• Real estate: 12.5% with no indexation (grandfathering applies for properties bought before July 2024)

Using the pre-Budget rates will result in an incorrect return.

7. Claiming deductions that do not apply under your regime

The new tax regime is now the default. Under it, most popular deductions are not available.

• 80C, 80D, HRA, LTA: all unavailable under the new regime
• Only 80CCD(2) (employer's NPS contribution) is allowed

If you want old regime deductions, you need to file Form 10-IEA before the due date and actively opt out.

8. Getting your residential status wrong

Residential status is determined under Section 6 of the Income Tax Act and is based on the number of days spent in India, not your passport or visa status.

• Resident: global income is taxable
• NRI: only Indian-sourced income is taxable
• RNOR: a middle category with its own rules

Getting this wrong can mean either over-reporting or missing income that should have been disclosed.

9. Not disclosing foreign assets

If you are a resident Indian and hold any of the following, disclosure in Schedule FA is mandatory:

• Foreign bank accounts
• Foreign shares, RSUs, or ESOPs from a non-Indian employer
• Any other foreign asset or income

Non-disclosure attracts a penalty of ₹10 lakh per year under Section 43 of the Black Money Act. This is one of the higher-risk omissions, especially for salaried employees in tech who receive RSUs from US-listed employers.

10. Missing the deadline

• ITR-1 and ITR-2 (salaried, capital gains): 31 July 2026
• ITR-3 and ITR-4 non-audit cases (business income, F&O): 31 August 2026
• Audit cases: 31 October 2026

Late filing attracts a fee of ₹5,000 under Section 234F, plus interest on any tax due.

Key takeaway

Most of these mistakes are not intentional. They happen because the rules changed, the forms are complex, or small details get overlooked.

Cross-checking your AIS and Form 26AS before filing catches most issues early. If your income includes capital gains, foreign assets, or F&O, it is worth spending extra time on those specific schedules.

ITR filing season for AY 2026-27 is on, and a lot of people are simultaneously getting scrutiny notices for last year's return, AY 2025-26. If you've just received one and panicked, here's a breakdown of what it means and what to do next.

Background

• A Section 143(2) notice is issued only when your filed ITR has been picked up for detailed scrutiny
• It's not a penalty notice. It simply means the Assessing Officer wants to verify something before finalizing your assessment
• For AY 2025-26 returns, these notices are being sent electronically through SMS, email, and the income tax portal
• The notice carries your PAN, the relevant assessment year, and the date of issue

Why returns get picked for scrutiny

• A mismatch between what you declared and what shows up in your AIS, Form 26AS, or TIS
• High-value transactions that don't line up with your reported income
• Deductions or exemptions that look unusually high compared to your income or past filings
• A sudden drop in income or jump in losses versus previous years
• Foreign income or foreign assets not properly disclosed
• Some cases are also picked up randomly through CASS, the department's automated selection system

The Income Tax Department generally had time until June 30, 2026, to issue a scrutiny notice.

What the notice asks for

• An explanation or clarification on the specific issue flagged
• Supporting documents like Form 16, Form 26AS, investment proofs, or property transaction records
• A response window that's usually 15 to 30 days from the date of the notice
• Details of how and where to respond, since most of this is now handled faceless through the e-filing portal

What you need to do

• Log in to the income tax portal and download the notice PDF to read it carefully
• Check the DIN (Document Identification Number) on the notice. Genuine communication from the department always carries one, and you can verify it on the portal
• Confirm your PAN and the assessment year mentioned actually match your filing
• Gather the documents relevant to whatever has been flagged, and respond within the deadline
• Ignoring it isn't an option. Non-response can lead to a best judgment assessment under Section 144, along with possible penalties

Key takeaway

A 143(2) notice doesn't automatically mean trouble. It just means your return has been flagged for a closer look, and the outcome depends entirely on how well you respond with documentation. The bigger thing to watch is the timeline: if the notice wasn't served within the prescribed window, it has no legal standing.

Anyone here actually received one this cycle? What got flagged in your case?

​

Hi everyone,

I'm in a very difficult situation and would really appreciate some guidance.

A tax consultant filed my Income Tax Return on my behalf. Without my knowledge or consent, he claimed a ₹5 lakh donation deduction in my return. My case was later selected for scrutiny.

Instead of handling the scrutiny, he completely ignored every notice from the Income Tax Department. He also failed to submit supporting documents like my education loan certificate, Section 80C proofs, and other documents that I had shared with him.

As a result, I received a tax demand of around ₹4.5 lakh. I somehow managed to pay it by pledging my mother's gold at the bank. After repeatedly requesting and pleading with the consultant for almost two months, he finally reimbursed ₹2 lakh and assured me that he would take care of any penalty proceedings as well.

Now I have received a penalty notice under Section 270A demanding ₹7,79,038, and the consultant has completely stopped responding to my calls and messages.

I have WhatsApp chats showing that the ₹5 lakh donation was added without my knowledge or consent. I also have a video recording in which he claims that he paid a bribe to Income Tax officials to get the scrutiny case cleared.

To give some context, I lost my father three years ago, and just eight months later I lost my uncle as well. During that period, I was struggling with depression and had very little understanding of income tax filing. I am the first person in my family to file an ITR, so I trusted the consultant completely and never thought to verify every detail of the return.

I am currently the only earning member in my family. My brother is preparing for his MD exams and is not working yet, so I am responsible for supporting my family and his education. This penalty has completely shattered me. I haven't been able to sleep, I can't concentrate on my work anymore, and I feel like everything we've worked so hard to build is falling apart. Paying a penalty of nearly ₹8 lakh would put my family under immense financial hardship and undo years of struggle.

Has anyone dealt with a similar situation?

Can this penalty be challenged?

Will the WhatsApp chats and video recording help prove that the false claim was made without my knowledge?

Can I take legal action against the tax consultant?

Should I immediately hire a Chartered Accountant or a tax lawyer?

I'm feeling completely lost right now, but I'm hoping someone who has gone through something similar can guide me. Any genuine advice or guidance would mean a lot.

Thank you for taking the time to read my post.

I bought some listed government bonds on NSE in 2022 and sold it in 2025. It is Long term assets.

CDSL has reported

Sales price - 100 Purchase price - 120 FMV - 125.

While calculating LTC loss, which one do I consider as cost of aquisition? Purchase price or FMV ? So is loss 25 or 20?

From what I understood, FMV is used only for equity purchased before 2018 when LTCG tax on equity was introduced to set a new baseline.

Thanks

Flat cost is around 1cr. TDS/TCS is 1%

https://preview.redd.it/sod4lj571e9h1.png?width=1498&format=png&auto=webp&s=10dbba68b88ee541ac4d72f94fa01981e2b115a8

Indians paid over ₹98,681 crore as LTCG tax on listed equities and mutual funds in FY23 alone. A big chunk of that could have been reduced with better planning. The rules vary sharply across assets, and mixing them up leads to costly mistakes.

This is a quick reference to get the rates and holding periods right, asset by asset.

Listed Equity Shares and Equity Mutual Funds

Hold more than 12 months: LTCG at 12.5% on gains above ₹1.25 lakh

Hold 12 months or less: STCG at 20%

These rates apply to sales made on or after 23 July 2024

Debt Mutual Funds (over 65% debt)

Bought before 1 April 2023: hold over 24 months = 12.5%; hold less = slab rates

Bought on or after 1 April 2023: always taxed at slab rates, regardless of how long you hold

No indexation benefit in either case

Hybrid MFs (under 35% equity) and Market-Linked Debentures

Bought before 1 April 2023: over 24 months = 12.5%; under 24 months = slab rates

Bought on or after 1 April 2023: always slab rates under Section 50AA

These are always treated as short-term. No LTCG benefit available

Hybrid Mutual Funds (35% to 65% equity)

Hold over 24 months: 12.5%, no indexation

Hold 24 months or less: slab rates

Date of purchase does not change the rule here, unlike debt funds

Sovereign Gold Bonds (SGB)

Redemption directly through RBI by an individual: fully exempt under Section 47(viic)

Sold on secondary market after 12 months: 12.5%, no indexation

Sold on secondary market within 12 months: slab rates

Non-Convertible Debentures (NCDs)

Listed NCDs held over 12 months: 12.5%, no indexation

Listed NCDs held 12 months or less: slab rates

Unlisted NCDs: always slab rates, regardless of holding period

Real Estate (Residential, Commercial, Land)

Hold over 24 months: LTCG at 12.5%, no indexation

Hold 24 months or less: STCG at slab rates

Bought before 23 July 2024: option available to pay 20% with indexation instead

Physical Gold and Gold ETFs

Physical gold held over 24 months: 12.5%, no indexation

Gold ETFs held over 12 months: 12.5%, no indexation

Below the respective holding periods: STCG at slab rates

Cryptocurrencies and NFTs (Virtual Digital Assets)

Flat 30% under Section 115BBH, regardless of holding period

Applies whether the VDA is a capital asset or not

No loss set-off, no indexation, no carry-forward of losses

Key Takeaway

The holding period threshold, the date of purchase, and the asset type all affect the final tax rate. These are not uniform across categories.

For most people, the biggest savings come from understanding two things: when LTCG exemption thresholds apply (listed equity), and when buying date locks in a different tax treatment entirely (debt funds post-April 2023).

All figures are based on the FY 2025-26 (AY 2026-27) framework.

https://preview.redd.it/zsbz1le9wy8h1.png?width=1251&format=png&auto=webp&s=2642edda58791300629d0787c6108e4dca75a38c

This is a recent ITAT Mumbai case from June 2026 that is very relevant for salaried employees whose employers deduct TDS but never actually deposit it with the government.

Background

Sophia was employed with Trimax IT Infrastructure and Services Ltd.

She filed her income tax return for AY 2019-20 showing income of Rs 18.41 lakh.

Her employer had deducted TDS of Rs 3,91,241 from her salary and paid her the net amount.

When CPC processed her return, it allowed TDS credit of only Rs 79,030.

The remaining TDS was missing from her Form 26AS because the employer had deducted the tax but never deposited it with the government.

This resulted in a demand of Rs 3,36,373 raised against Sophia.

What the Tax Department said

Since the TDS was not reflecting in Form 26AS, the department did not grant full credit.

The demand stood on record.

When Sophia sought rectification from CPC, it was rejected.

Her first appeal before CIT(A) was dismissed as time-barred.

The department argued that delay had not been adequately explained and the appeal could not be entertained.

What the taxpayer argued

Sophia appeared in person and submitted her case with supporting documents.

She provided salary slips, Form 16, and bank statements showing that TDS was deducted from her salary and only the net amount was credited to her account.

Her position was straightforward: the employer deducted the tax, she never received that money, so she cannot be held liable for the employer's failure to deposit it.

She had been pursuing rectification before CPC for a long time, which is why the appeal was delayed.

What the court decided

The Tribunal condoned the delay since Sophia had been genuinely pursuing rectification before CPC and had no other option left.

On the merits, the Tribunal relied on a clear legal position:

Section 205 of the Income Tax Act bars the department from raising a demand on an employee when TDS has already been deducted from their salary.

CBDT Instruction No. 275 dated 01-06-2015 reinforces the same position.

The Tribunal also cited the Gujarat High Court decision in Gayatri Snehal Rao, which holds that where an employer deducts TDS but does not deposit it, no demand can be raised against the employee.

This position was confirmed by the Supreme Court on 06-02-2026, where the department's SLP was dismissed.

Following these precedents, the Tribunal directed the Assessing Officer to verify Sophia's documents and grant full TDS credit.

The appeal was allowed.

Key takeaway

If your employer deducted TDS from your salary but never deposited it, that is the employer's default, not yours.

The law under Section 205 protects employees in exactly this situation.

A demand raised against you in such cases is legally unsustainable.

If this has happened to you, file an appeal and present your salary slips, Form 16, and bank statements showing net salary credit. The Tribunal and courts have consistently ruled in favor of employees.