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The release of ITR-1 and ITR-4 utilities has effectively opened the income-tax return filing season for AY 2026–27. Many salaried taxpayers have already begun preparing to file their returns, driven by the desire to complete compliance early, secure faster refunds, or avoid the last-minute rush.
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However, an important question deserves far greater attention
Does the availability of the ITR utility necessarily mean that taxpayers should immediately proceed with filing their returns? For many taxpayers, the answer is clearly ‘No’.
Over the years, return filing has increasingly evolved into a data-driven compliance exercise. An Income Tax Return today is no longer examined in isolation. It is continuously matched with data flowing from employers, banks, financial institutions, registrars, mutual funds, brokers and multiple reporting entities through TDS statements and SFT reporting.
This is precisely why filing a return too early may sometimes create avoidable complications.
Availability of ITR utilities does not mean tax data is complete
Many taxpayers assume that once the return filing utility becomes available, the underlying tax data ecosystem is also fully updated, often overlooking the disclaimer relating to AIS, Form 26AS, and prefilled ITR data.
That assumption is often incorrect.
At the beginning of the filing season, several important statutory filings relating to the last quarter of FY 2025–26, relevant to AY 2026–27, are still pending. Consequently, the Annual Information Statement (AIS), Form 26AS, and prefilled return data available to taxpayers may not yet reflect the complete financial picture.
This becomes particularly relevant for salaried individuals who also earn other taxable income, such as:
- Interest income
- Rental income
- Capital gains
- Dividend income
- Professional receipts
In such situations, filing returns merely because the utility is available may result in incomplete disclosure of income, reporting mismatches, or denial of tax credit.
The reporting cycle continues beyond utility release
One of the most important aspects taxpayers often overlook is that the reporting cycle itself continues well beyond the release of the ITR utilities.
(1) Salary TDS reporting is still pending
Employers are required to file quarterly salary TDS statements for the quarter ended March 2026 in Form 24Q by May 31, 2026. Until these statements are filed and processed:
- Salary details may not be fully reflected in AIS
- TDS credit may remain unavailable
- Form 26AS may remain incomplete
- Prefilled return data may not reflect final figures
Many employers file these statements closer to the statutory due date. Therefore, employees filing returns too early may not see accurate salary and TDS information in their records.
Also read: Who can file ITR-1 this year? Common mistakes to avoid while filing ITR-1 for AY 2026-27 on or before July 31, 2026
(2) Non-salary TDS data may also remain incomplete
The same issue extends to non-salary income. Banks and other deductors reporting TDS through Form 26Q are also required to file their quarterly statements for the quarter ended March 2026 by May 31, 2026.
Until such filings are completed other taxable receipts and related TDS credits may not reflect correctly.
This may create inconsistencies between the return filed by the taxpayer and the information subsequently reflected in AIS and Form 26AS based on TDS statements filed with the Income Tax department.
Also read: Man pays zero tax on Rs 5 crore land sales despite filing ITR after deadline; ITAT Mumbai rules in his favour for this reason
Form 16 and Form 16A are yet to be issued
Another practical consideration is that Form 16 and Form 16A are issued only after the TDS reporting process is completed.
Under Rule 31, employers are required to issue Form 16 by June 15, 2026. Similarly, for non-salary TDS, deductors are required to issue certificates in Form 16A by mid-June in respect of TDS deducted during the last quarter of FY 2025–26.
These documents remain fundamental for proper reconciliation because they help taxpayers verify:
- Income figures
- TDS credits
- Tax deductions
- AIS entries
- Form 26AS data
Filing returns before such reconciliations are completed may increase the likelihood of mismatches and future compliance issues.
SFT reporting can materially alter AIS
Apart from TDS reporting, information in AIS is also populated through Statement of Financial Transactions (SFT) filings made under Section 285BA. Specified entities are required to file Statement of Financial Transactions by 31 May 2026 reporting high-value specified transactions, including:
- Mutual fund investments
- Securities transactions
- Property transactions
- Credit card payments
- Large cash deposits and fixed deposits
- Large banking transactions
- Interest income
- Capital gains transactions
Until these filings are processed, AIS may not fully capture the taxpayer’s reportable financial activities. This becomes particularly relevant in an environment where data analytics and automated mismatch detection have become central to tax administration.
Early filing may trigger unnecessary tax issues
A large number of taxpayers today are primarily focused on filing their returns early, often well before the due date. In reality, however, the greater risk may lie elsewhere. An inaccurately filed return may lead to:
- Mismatch notices
- Denial of TDS credit
- Refund delays
- Tax demands
- Rectification proceedings
- Filing of revised returns
In many cases, taxpayers ultimately spend far more time correcting an early-filed return than they would have spent waiting for the tax data ecosystem to stabilise. However, this does not mean that taxpayers should delay filing beyond the statutory due date, as delayed filing may result in the loss of certain benefits, including the option to change the tax regime.
AIS reconciliation is no longer optional
Tax compliance has fundamentally changed over the last few years. Earlier, return filing largely depended on taxpayer disclosures. Today, however, compliance is increasingly driven by third-party reporting and system-based verification. As a result, reconciliation of the following has become an essential part of return filing:
- AIS
- Form 26AS
- Form 16
- Form 16A
- Prefilled ITR data
Taxpayers should therefore resist the temptation to treat return filing as a race to file first.
Why waiting may be the smarter strategy
For most salaried taxpayers, especially those having multiple income streams or investments, a more prudent approach may be to wait until:
- TDS statements are filed
- Form 16 and Form 16A are issued
- AIS is substantially updated
- Form 26AS reflects final TDS credits
- Reported discrepancies are corrected
In a majority of cases, AIS data becomes more reliable during June and July after processing of TDS statements and correction filings.
The bigger message for taxpayers
The release of ITR utilities should be viewed as the beginning of the filing season but not necessarily the ideal time for immediate filing. Taxpayers need to understand that the objective of return filing is not merely early submission but accurate and defensible compliance.
In an environment where the Income-tax Department increasingly relies on technology-driven verification, AIS reconciliation and data consistency have become far more important than filing speed. For many taxpayers, waiting for complete reporting and proper reconciliation may ultimately prove to be the wiser approach.
In tax compliance, filing correctly is often far more important than filing early.
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The author O.P. Yadav is a former IRS officer with over 36 years of experience in tax administration, education, and training. He is presently associated with Prosperr.io as Tax Evangelist. The views expressed are personal.
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