For most salaried employees in India, tax filing is not something they look forward to. It’s often rushed, confusing, and treated as a once-a-year formality rather than an important financial responsibility. Because salary income is already taxed through TDS, many people assume filing returns is simple—and that assumption leads to costly mistakes.
In reality, even small errors while filing income tax returns can result in notices, delayed refunds, penalties, or missed benefits. Most of these mistakes are not intentional. They happen due to lack of awareness, last-minute filing, or blind dependence on Form 16 alone.
This article explains the most common tax filing mistakes salaried employees make, why they happen, and how to avoid them—so you can file confidently and correctly.
Mistake 1: Assuming Form 16 Is Enough
One of the biggest misconceptions among salaried employees is that Form 16 contains everything required for tax filing. While Form 16 is important, it is not a complete picture of your income.
Form 16 only reflects:
- Salary paid by your employer
- TDS deducted on that salary
It does not automatically include:
- Bank interest
- Freelance or side income
- Rental income
- Capital gains
- Income from multiple employers
Relying solely on Form 16 can lead to underreporting income, which may attract scrutiny from the Income Tax Department later.
Mistake 2: Not Reporting Bank Interest Income
Many salaried individuals ignore interest earned on savings accounts and fixed deposits because no TDS is deducted in some cases. However, interest income is fully taxable, even if the amount is small.
Commonly missed sources include:
- Savings account interest
- Fixed deposit interest
- Recurring deposit interest
Banks report this data directly to tax authorities, so omitting it can easily trigger a mismatch.
Mistake 3: Choosing the Wrong Tax Regime
With the availability of old and new tax regimes, many salaried employees select a regime without proper calculation. This is a serious mistake.
The old regime allows deductions and exemptions.
The new regime offers lower slab rates but fewer deductions.
Blindly choosing the new regime because it “sounds simpler” or sticking to the old regime out of habit can result in higher tax liability.
Every salaried employee should compare both regimes based on:
- HRA eligibility
- Home loan interest
- Section 80C investments
- Health insurance premiums
A wrong choice means paying more tax than necessary.
Mistake 4: Incorrect HRA Claims
House Rent Allowance (HRA) is one of the most misused and misunderstood exemptions.
Common HRA mistakes include:
- Claiming HRA without paying rent
- Not having rent receipts
- Not reporting landlord’s PAN when required
- Claiming HRA while living in own house
False or incorrect HRA claims are easily flagged during verification and can lead to penalties.
Mistake 5: Ignoring Income from Previous Employer
Employees who changed jobs during the financial year often forget to include income from their previous employer.
This results in:
- Underreporting total salary
- Incorrect tax calculation
- Mismatch in TDS records
Even if your current employer considers only present salary, you must include income from all employers while filing returns.
Mistake 6: Missing Deadlines or Filing Late
Many salaried employees delay filing until the last moment, increasing the chance of errors.
Late filing consequences include:
- Late filing fees
- Loss of ability to revise returns freely
- Delayed refunds
- Increased scrutiny
Filing early gives you time to correct mistakes calmly and reduces stress.
Mistake 7: Not Verifying the Return
Filing the return is not the final step. Verification is mandatory.
Many people assume their job is done after submission, but if the return is not verified:
- It is treated as invalid
- Refunds are not processed
- Filing is considered incomplete
Verification can be done electronically and takes only a few minutes. Skipping it is one of the simplest yet most common mistakes.
Mistake 8: Claiming Deductions Without Proof
Some employees claim deductions under sections like 80C or 80D without having proper documentation.
Examples include:
- Claiming life insurance premiums not paid
- Declaring investments that were planned but not executed
- Claiming health insurance paid in cash
If selected for scrutiny, lack of proof can lead to tax demand and penalties.
Mistake 9: Forgetting Capital Gains
Many salaried individuals invest in:
- Mutual funds
- Stocks
- ESOPs
But forget to report capital gains, especially when gains are small or investments are sold casually.
Capital gains are reported separately and are not part of salary income. Ignoring them leads to mismatch with broker-reported data.
Mistake 10: Incorrect Bank Account Details
Entering wrong bank details can delay or completely block tax refunds.
Common errors include:
- Wrong account number
- Inactive bank account
- Account not pre-validated
Always ensure the bank account entered is active and verified before submitting the return.
Mistake 11: Not Checking Form 26AS and AIS
Form 26AS and the Annual Information Statement (AIS) provide a consolidated view of income reported against your PAN.
Ignoring these documents can result in:
- Missing income sources
- Mismatches with tax department data
- Unexpected tax notices
Reviewing these statements before filing helps ensure accuracy.
Mistake 12: Assuming Small Errors Don’t Matter
Many salaried employees believe small mismatches will be ignored. This is no longer true.
With increased digitization:
- Even minor discrepancies are detected
- Automated notices are generated
- Manual explanations are required later
Accuracy matters more than ever.
Mistake 13: Depending Completely on Others
While tax professionals and online platforms are helpful, blind dependence is risky.
Some employees:
- File returns without reviewing details
- Sign off without understanding calculations
- Discover mistakes only after receiving notices
You don’t need to be a tax expert—but you must understand your own return.
Mistake 14: Not Revising Return When Needed
If you realize a mistake after filing, many people panic or ignore it. This worsens the situation.
Revising a return is allowed within prescribed timelines and can correct:
- Missed income
- Wrong deductions
- Incorrect personal details
Timely revision shows compliance and reduces penalties.
Mistake 15: Treating Tax Filing as a One-Time Task
Tax filing should not be an annual panic exercise. It works best when treated as a year-round process.
Good habits include:
- Tracking investments
- Maintaining documents
- Reviewing salary slips
- Monitoring tax statements periodically
This reduces mistakes and stress significantly.
Why Salaried Employees Make These Mistakes
The root causes are simple:
- Lack of awareness
- Overconfidence due to TDS
- Complex tax rules
- Procrastination
Most mistakes are avoidable with basic attention and timely action.
How to Avoid These Mistakes Going Forward
To file correctly:
- Start early
- Review Form 26AS and AIS
- Declare all income sources
- Choose the right tax regime
- Verify returns promptly
- Keep documentation ready
A little effort saves a lot of trouble later.
Final Thoughts
Tax filing is not just about compliance—it’s about protecting your financial credibility. For salaried employees, mistakes often happen not because taxes are complex, but because they are taken lightly.
Avoiding common tax filing mistakes ensures:
- Faster refunds
- Peace of mind
- No unnecessary notices
- Better financial discipline
In today’s data-driven system, accuracy matters more than speed. Filing correctly, even if it takes a bit more time, is always worth it.
Tax mistakes cost money. Awareness saves it.
📌 Educational Disclaimer
This article is for educational purposes only and does not constitute financial advice. Investment decisions should be made based on your personal financial situation and risk tolerance.