Salaried Taxpayer? 10 Things To Keep In Mind While Filing Your ITR For FY 2025-26

The tax return filing season is finally here, and while you gear up with all the documents and information required to file your income tax return (ITR), it’s important to keep a few things in mind. This will not only help you ensure that you file your return correctly, but also identify all tax breaks and deductions that you may be able to claim.

1. Choosing The Correct Tax Regime and Tax Return

Compare the old and the new tax regimes before filing. While the new regime is now the default regime, taxpayers eligible for deductions such as house rent allowance (HRA), home loan interest, Section 80C, 80D, among others, should evaluate whether the old regime results in lower tax liability. This can be done through the tax calculator hosted by the Income Tax Department on its website - https://www.incometaxindia.gov.in/income-tax-calculator.

Says Preeti Sharma, partner, global employer services, tax & regulatory services, BDO India: “Many salaried taxpayers incorrectly continue using ITR-1 despite having capital gains, income from crypto assets, foreign assets, employee stock option plan (ESOP) taxation or directorships. In such cases, ITR-2 may become applicable.”

2. Reconcile Form 16, AIS, Form 26AS and Base Documents

Salary income, TDS (Tax Deducted At Source), interest income and investment details should be cross-checked across Form 16/16A, annual information statement (AIS) and Form 26AS to identify mismatches before ITR filing. Likewise, interest from savings accounts, fixed deposits, recurring deposits or income from fintech platforms may appear in AIS even if overlooked initially. Taxpayers should verify the correctness with banks and include it appropriately in the return.

Also, dividend income from shares and mutual funds may appear across multiple brokers and AIS entries. Taxpayers must be diligent and report all income even if TDS is not deducted.

3. Fully Disclose All Capital Gains

Owning shares, mutual funds, exchange-traded funds (ETFs) or crypto assets is common even for salary earners. It’s important to declare all capital gains and losses, including short-term.

“Income from crypto assets is subject to specific tax provisions, including a flat tax rate and disclosure requirements. Even loss-making transactions may need reporting,” says Sharma. 

4. Disclose Foreign Assets and Overseas Income Carefully

Sharma says that holding foreign shares, ESOPs, overseas brokerage accounts or foreign bank accounts may trigger foreign asset reporting requirements in the ITR for resident tax-payers. Non-reporting may lead to huge penalties under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

5. Revisit Your Deductions and Exemptions

Taxpayers should verify deductions under Sections 80C, 80D, 80CCD, interest paid on home loan and other eligible deduction claims left out during the filing process, particularly where proofs were not provided to employer/allowable expenses were paid by yourself during the year.

6. File Your Return Early and Verify The Return Quickly

Submitting your return just before the deadline leaves little time for verification. As such, taxpayers should file their return well in time before the last date to allow time for review and rectification, if needed. It’s also important to verify your return within the due date. Else the return will be deemed as unverified and could lead to delay in tax refund.

7. Verify Whether HRA Exemption Has Been Correctly Considered and Change Of Jobs

Employees who changed jobs, worked remotely, or shifted cities during the year should recheck HRA calculations, rent declarations and landlord details before filing.

Says Sharma: “If the taxpayer switched jobs during the financial year, salary from all employers must be consolidated while filing. Failure to do so can result in underpayment of tax and interest liability.”

8. Report Exempt Income Where Required

Exempt income such as interest from Public Provident Fund (PPF), tax-free bonds, or agricultural income may still need disclosure in the return even if not taxable. 

9. Respond To Notices/AIS Mismatch Even After Filing Returns

After filing your returns, make sure you keep an eye on the portal for:
a. AIS mismatch
b. Intimation under Section 143(1)
c. Show cause demands
d. Defective return notices
If you receive any such mismatch, intimation, or demand notice, contact your tax professional and understand how best such issue can be sorted.

10. Keep Relevant Documents Handy

Taxpayers must keep the following documents handy:

a. Form 16
b. Documents that prove your investments
c. Rent receipts
d. Capital gain reports
e. Records of foreign assets
f. Any other base documents pertaining to the income mentioned in your ITR

Please make sure you have these documents handy for any future verification or assessments.

FAQs

1. Which tax regime should I opt for FY 2025-26 if I am a salaried taxpayer?

As taxpayers now have the new tax regime as their default tax regime, they can file their return under this regime unless they are claiming deductions like HRA, home loan interests, deductions under section 80C, 80D, etc. It’s advised that they should check which tax regime gives them lower tax liability before filing their tax return.

2. Do I need to report/share information about capital gains from shares, mutual funds, crypto investments etc?

Yes. While filing returns, you must report information about all capital gains. This includes short-term capital gains or losses from shares, mutual funds, ETFs, and virtual digital assets (VDA) such as cryptocurrencies in your income tax return.

3. What if I don’t verify my ITR after filing it?

An income tax return isn’t considered complete until taxpayers have verified their return. The Income Tax Department may treat your return as not verified or not filed if you fail to verify your return by the due date. You may also be liable to pay penalty and face compliance issues.