The Income Tax Department’s pre-filled ITRs already include information such as salary, bank interest, dividends, tax deducted at source (TDS) and certain investment details, making return filing considerably easier than before.
But tax experts say the convenience comes with an important caveat: a pre-filled return is only a draft based on information available with the department. It is not a confirmation that all taxable income has been captured correctly or that the tax liability has been computed accurately.
Skipping the reconciliation process could result in notices, delayed refunds or even paying more tax than necessary.
Pre-filled does not mean complete
A pre-filled ITR pulls data reported by employers, banks, mutual funds, depositories and other financial institutions. However, the responsibility for filing a complete and accurate return continues to rest with the taxpayer.
Harsh Bhuta, Managing Partner at Bhuta Shah & Co LLP, a full-service, Chartered Accountant-led professional services firm, says taxpayers should treat the pre-filled return as the starting point, not the final tax computation.
“The responsibility for reporting accurate and complete income remains with the taxpayer,” Bhuta says.
He advises taxpayers to reconcile the information with Form 26AS, the Annual Information Statement (AIS) and the Taxpayer Information Summary (TIS) before filing, as these may contain updated information that is not reflected in the downloaded return.
Why notices still arrive despite pre-filled returns
The Income Tax Department has significantly expanded its use of data analytics and automated compliance checks, making it easier to identify inconsistencies across multiple data sources.
Bhuta says notices are commonly triggered by mismatches in income or TDS, incorrect deduction or exemption claims, discrepancies in capital gains reporting and errors in tax regime claims. He also points out that disclosures relating to foreign assets, foreign income and certain schedules are not pre-filled and have to be reported separately wherever applicable.
Manish Garg, Partner – Tax at AKM Global, a tax consulting firm, says pre-filled returns reduce paperwork but cannot eliminate the complexity of tax laws.
“Governments can only pre-populate information they already receive from employers, banks and other reporting entities. They often do not have visibility into deductible expenses, self-employment income, capital gains calculations, foreign assets or eligibility for certain tax credits,” Garg says.
He adds that automated risk-based checks are increasingly used to identify inconsistencies or unusual claims, which can lead to notices or hold up refund processing.
Why refunds sometimes take longer
Receiving a refund is often one of the main reasons taxpayers file early, but experts say processing delays can occur for reasons beyond the filing date.
Swati Jain, CEO – Wealth at Arihant Capital Markets, an Indian public financial services company, says taxpayers should not mistake a pre-filled return for a pre-assessed return.
“It isn’t. Pre-filling only imports information reported by employers, banks, brokers and other institutions. It does not confirm that the information is complete, correctly classified or represents the final taxable income,” she says.
Jain adds that many communications issued by the Income Tax Department are automated compliance checks rather than scrutiny notices and are meant to seek clarification or verification.
Why some taxpayers pay more tax than required
Experts say blindly accepting the pre-filled return could also mean missing legitimate tax benefits.
Bhuta says taxpayers who do not review their return carefully may overlook eligible deductions, tax credits, loss set-offs or relief available under Double Taxation Avoidance Agreements (DTAA).
Garg says pre-filled returns can sometimes create a false sense of confidence.
“If taxpayers fail to add missing deductions or correct errors, they may pay more tax than necessary. Conversely, if third-party data are incorrect or incomplete, taxpayers remain legally responsible for the return, which can lead to notices later,” he says.
Jain adds that taxpayers can also end up paying higher tax by selecting the wrong tax regime, overlooking eligible deductions or failing to claim available tax credits.
