According to The Times of India, filing your return after the prescribed due date can result in significant penalties. Under Section 234F of the Income Tax Act, taxpayers who fail to file their ITR on time may have to pay a late fee of up to ₹5,000, while those with total income not exceeding ₹5 lakh face a restricted late filing fee of ₹1,000. However, failing to disclose all taxable income can attract even heavier penalties. Under Section 270A, taxpayers who under-report income are liable to pay a penalty equal to 50% of the tax payable on the under-reported amount. If the tax department finds that the taxpayer has deliberately concealed income, made false entries or claimed incorrect deductions, it is treated as misreporting, and the penalty can increase to 200% of the tax payable on the misreported income. For Financial Year 2025-26 (AY 2026-27), the income tax department has listed comprehensive consequences for various tax defaults, with penalties ranging from ₹1,000 to the full amount involved depending on the nature of the default.
According to The Times of India, many individual taxpayers view filing an Income Tax Return (ITR) as a straightforward task—declaring salary income, updating investment details and paying any balance tax. However, capital gains can turn an otherwise straightforward tax return into a complicated exercise. Post Covid, it has become common for salaried employees to invest in and trade equities and similar assets. During the year, they may sell shares, redeem mutual funds, book gains from foreign Employee Stock Options (ESOPs), Restricted Stock Units (RSUs) or other investments, or dispose of inherited property.
As reported by The Times of India, eight common capital gains mistakes taxpayers make include missing one or more buy or sale transactions across multiple brokers, funds, applying the wrong holding period and misclassifying gains as short-term or long-term, relying only on brokerage statements without reconciling the figures with Annual Information Statement (AIS), ignoring gains from foreign shares, overseas ETFs or global investment platforms, reporting cryptocurrency transactions only on a net-profit basis, missing exemption deadlines under Sections 54, 54F or 54EC, failing to disclose foreign assets, and losing the benefit of carry forward losses because the ITR was not filed within the due date.
According to The Times of India, capital gains are classified into two categories: short-term gains (held for less than 12 months) and long-term gains (held for more than 12 months). The cost of acquisition, eligible improvement costs, expenses directly connected with the transfer, and applicable exemptions where the law permits reinvestment must be identified. For residential property, tax is levied at 12.5% without indexation or 20% with indexation, while unlisted shares, foreign investments, ESOPs and RSUs require special attention including maintaining foreign broker statements, retaining proof of foreign taxes paid, and keeping currency conversion workings.
As reported by The Times of India, cryptocurrency gains are taxed at a flat rate of 30%, regardless of income level. Only the acquisition cost is allowed as a deduction, losses cannot be set off against other income or carried forward, crypto received as a gift may be taxable for the recipient, transactions must be reported separately in Schedule VDA, and a 1% TDS may apply in specified cases. Intraday trading profits are generally treated as business income, not capital gains, and gains or losses from Futures and Options transactions are generally treated as non-speculative business income.
According to The Times of India, capital gains reporting is under greater scrutiny than ever as the ITR filing season for Financial Year 2025-26 (AY 2026-27) progresses. With the Income tax department increasingly using technology, data analytics, AIS, broker reports, mutual fund disclosures and overseas information exchange, filing an accurate ITR now requires not only correct tax computation but also complete and consistent reporting. Taxpayers must maintain complete transaction records, verify holding periods, reconcile figures with AIS and Form 26AS, evaluate applicable exemptions before filing, and preserve documents relating to foreign investments and assets. The filing process is not complete until the return is verified through Aadhaar OTP, net banking, a demat account or other approved methods within the prescribed time. For AY 2026-27, the income tax department has already received more than 3 crore ITRs as of July 22, with 15 lakh ITRs filed yesterday alone, urging taxpayers not to wait until the last moment to file their returns.
