Know Which ITR Form Is Right For You

Ensure Correct Reporting Of Capital Gains

- SAIKAT NEOGI

As the deadline for filing income tax returns (ITR) is September 15, 2025, taxpayers must avoid some common mistakes that can lead to notices under Section 143(1). Taxpayers must pay attention to the changes in the ITR utilities which have undergone significant updates for Assessment Year (AY) 2025-26.

A key error is choosing the wrong ITR form. Taxpayers must opt for ITR-1 and ITR-4 to report exempt long-term capital gains (LTCG) up to ₹1.25 lakh under Section 112A. However, those with short-term capital gains (STCG) or LTCG exceeding this threshold will have to opt for ITR-2 or ITR-3.

Another oversight can be incorrect reporting of capital gains in Schedule CG. Taxpayers must now bifurcate gains based on the date of transfer before and on/after July 23, 2024, due to revised tax rates. Failing to disclose the exact transfer date or misclassifying gains can result in incorrect tax computation.

Sandeep Sehgal, partner, Tax, AKM Global, a tax and consulting firm, says neglecting to maintain proper documentation of asset sales or inconsistencies between Form 26AS/AIS and the return can trigger compliance issues. "Careful selection of the ITR form, accurate reporting of gains, and a thorough review of all schedules are essential to avoid such pitfalls," he says.