Common Mistakes to Avoid

Every major tax law transition creates a predictable wave of avoidable errors — not because the rules are hard, but because assumptions about what changed (and what didn't) go unchecked. Here are the mistakes taxpayers are actually making right now, and how to avoid them.

Transition-Specific Mistakes

1. Filing under the wrong Act because "the new Act is already in force." The most common confusion this year: assuming that because the 2025 Act is legally in effect, it applies to your current filing. It doesn't — which Act applies depends on when the income was earned, not when you're filing. FY 2025-26 income is filed entirely under the old 1961 Act, even in mid-2026.

2. Thinking you need to file two returns for the transition year. CBDT has explicitly clarified this isn't the case — income earned during FY 2025-26 is reported once, through the AY 2026-27 return under the 1961 Act. You don't split a single year's income across two filings.

3. Assuming old assessments or approvals became invalid. A completed assessment or approval granted under the old Act stays valid even after the repeal — the transition doesn't retroactively disturb settled matters.

Regular Filing Mistakes That Get Worse During a Transition

Beyond transition-specific confusion, the usual filing errors — the ones that cause defective returns and delayed refunds every year — become more common when taxpayers are already distracted by the new Act's terminology changes.

Regime-Switching Errors

Confusion between the old and new tax regimes remains one of the costliest mistakes. Investing in Section 123-eligible instruments (PPF, ELSS, insurance) while filing under the new regime provides zero tax benefit — the deduction simply isn't available under that regime, no matter how much was invested.

Illustration: A taxpayer invests ₹1.5 lakh in ELSS specifically for tax savings, but has already opted into the new tax regime for the year. Since Section 123 deductions require the old regime, none of that ₹1.5 lakh reduces their taxable income — the tax-saving intent and the regime choice were mismatched.

Common Mistakes

1. Not checking the year of income before selecting the Act tab. Always ask "when was this income earned," not "what's the current date" — that single question determines which Act and which portal tab apply.

2. Waiting until the deadline to gather investment proofs. Deductions under the old regime require documentation (rent receipts, donation certificates, premium statements) — leaving this to the last week increases the odds of missing eligible claims entirely.

Key Takeaway: The biggest transition-era mistake is applying the new Act to filings it doesn't govern — the rule is simple: the law applicable depends on the year the income was earned, not the date you're filing. Layer on the usual AIS-mismatch and regime-switching errors, and most defective returns this season are avoidable with a bit of care. Want to see how this specifically plays out for your income type? See Impact on Salaried Individuals.

Frequently Asked Questions

Do I need to file separate returns for the old and new Act during the transition?

No — CBDT has confirmed this isn't required. A given year's income is reported once, under whichever Act governs that year.

What happens if my capital gains figures don't match my AIS?

A mismatch between your self-reported figures and the Annual Information Statement often triggers an automated query, which can require filing a revised return to resolve.

What happens if I forget to e-verify my return?

An unverified return is treated as though it was never filed, which can mean missing the filing deadline entirely if not corrected in time — e-verification is a required final step, not optional.

Can I switch tax regimes if I already invested in 80C-eligible instruments?

You can generally choose your regime each year, but the deduction only applies if you file under the old regime for that year — the investment itself doesn't guarantee the deduction regardless of regime.