ITR Filing: 200% Penalty Risk For Taxpayers, Avoid This Mistake; Stay Compliant

The Income Tax Department has extended the deadline to file ITR-1 for non-audit cases to September 15, 2025. They are asking taxpayers not to claim wrong deductions. This means don’t ask for money back that you didn’t spend or can’t prove.

Common Deductions to Know

You can claim deductions for things like Public Provident Fund (PPF) and Equity-Linked Savings Schemes (ELSS) under Section 80C. Health insurance is under 80D, education loan interest under 80E, and savings scheme interest under 80TTA/TTB. These are normal deductions allowed by the tax rules.

Heavy Penalty for Wrong Claims

If you make false claims under the new ITR rules, you could face a big fine. Under Section 270A of the Income Tax Act, 1961, you may have to pay a penalty of up to 200 percent of the tax you owe, plus interest every year. In serious cases, you could even face a court case under Section 276C. To avoid fines and legal trouble, only claim what is true.

Choose the Right Tax Regime

The new tax regime is now the default option. It offers lower tax rates but doesn’t allow deductions like 80C, 80D, HRA, or LTA. The old regime allowed these but had higher rates. Use an online calculator to compare both and pick the best one. Salaried people can opt out via the ITR form, while business owners need Form 10-IEA. Your chosen regime should match what you told your employer.

Keep Important Documents Safe

To avoid checks, keep proof of your claims. For example:

80C: PPF passbook, ELSS statements, tuition fee receipts.

80D: Insurance payment receipts.

HRA: Rent agreement, landlord’s PAN (if rent exceeds Rs 1 lakh).

Home loan: Interest or principal certificates.

Donations: Receipts from eligible organizations.

80E: Education loan interest certificate.

Match AIS and Form 26AS

Check your income and deductions with:

AIS: Shows details like interest, dividends, or mutual fund transactions.

26AS: Shows TDS, advance, or self-assessment tax.

Mismatches can lead to notices. Fix errors by giving feedback or contacting deductors.

Avoid False Claims

Don’t claim 80C, HRA, or other sections not allowed in the new regime. Avoid personal expenses, exaggerated claims, or cash deductions where not permitted.Verify Your ITRVerify your ITR using Aadhaar OTP, net banking, or a pre-validated account. You can also send a signed ITR-V to CPC Bengaluru within 30 days. Unverified returns are not valid.