An increasing number of Indian taxpayers are dealing with problems relating to inaccurate or incomplete Income Tax Return (ITR) files as a result of tighter validation checks and changing tax return formats. The result? an increase in “defective return” notifications under Section 139(9) of the Income Tax Act, which can result in penalties, delayed refunds, and in certain situations, the declaration of invalid returns.
You were not allowed to file an ITR-1 in previous years if you had any capital gains, whether they were taxable or exempt. If your only capital gains from stocks or equities mutual funds are small (up to ₹1.25 lakh) and you have no carry-forward losses, you can now file an ITR-1 under the revised regulations. However, submitting an ITR-1 will render your return void if your capital gains over ₹1.25 lakh.
The tax department quickly flags such occurrences and issues a notification, usually giving the taxpayer 15 days to correct the error.
