As the July 31 deadline nears, taxpayers relying on pre-filled Income Tax Returns face risks of errors and tax notices. Experts urge reconciling data with Form 26AS and AIS to avoid payment mistakes or refund delays.
Detailed Coverage
With the July 31 deadline for filing Income Tax Returns (ITRs) for the 2025-26 assessment year fast approaching, many taxpayers are using the Income Tax Department's pre-filled facility. While this system automatically populates information like salary, dividends, and tax deducted at source (TDS), relying on it without verification can lead to significant financial and compliance headaches.
Why Pre-Filled Data Is Just a Draft
Financial experts clarify that pre-filled returns should be treated as a starting point rather than a final, verified statement. The core responsibility for reporting accurate income and claiming correct deductions remains entirely with the taxpayer. Data provided by the department is based on information received from third parties, such as banks and employers, which may not always be up to date or fully comprehensive at the time of processing.
To ensure accuracy, it is essential to reconcile the pre-filled entries against your own financial records, Form 26AS, the Annual Information Statement (AIS), and the Taxpayer Information Summary (TIS). Skipping this step could mean that errors in reported interest income or TDS mismatches go unnoticed, eventually inviting scrutiny from tax authorities.
Common Pitfalls and Compliance Risks
Tax authorities now use sophisticated data analytics to flag inconsistencies in filings. When a taxpayer submits a return that contradicts internal system data, it frequently triggers an automated compliance notice. Common reasons for these notices include incorrectly reported capital gains, mismatches in claimed deductions, or errors in selecting the appropriate tax regime.
Furthermore, the pre-filled forms do not capture every detail required by law. Information regarding foreign assets, income from foreign sources, and specific schedules related to self-employment income must be reported manually. Failing to disclose these correctly or selecting an unfavorable tax regime by mistake can result in higher tax liability than what is legally required.
Financial Impact of Ignoring Verification
Accepting pre-filled information blindly can also lead to missed opportunities. Taxpayers might inadvertently fail to claim legitimate tax credits or deductions, leading to overpayment. In some instances, incorrect data entry may result in delayed processing of refunds, as the tax department may initiate additional verification cycles to resolve discrepancies. Before hitting the final submit button, it is prudent to manually review all sections, particularly those involving tax credits and deductions, to ensure that the final return reflects your actual financial position for the year.