Filing your Income Tax Return (ITR) can feel like navigating a maze — forms, deadlines, exemptions, investments, tax deductions and the fear of “Did I file correctly?” Among the many things circulating, there are certain myths and misconceptions that keep resurfacing. Believing them can lead to missed opportunities, penalties, and unnecessary stress. In this article, we’ll debunk five of the biggest myths around income tax and ITR filing in India, explain the reality, and help you approach your tax-filing with confidence.
Table of Contents
1.Myth: “Only the rich need to pay income tax or file ITR”
What many think: Income tax is only relevant if you are very wealthy, or own a big business or have huge earnings.
Reality: Tax liability and the obligation to file ITR are based on your income level and other conditions under the Income‑tax Act, 1961 — not just how “rich” you feel. According to Section 139(1) of the Act, if your gross total income (before certain deductions) exceeds the basic exemption limit, you must file an ITR. Newstrack English+4NDTV Profit+4ABP Live+4
For example:
- Individuals under 60 years: if gross income > ₹ 2.5 lakh (as updated) then ITR filing may be required. ABP Live+1
- Even if your income is below the exemption limit, there are provisos which may still make it mandatory to file — e.g., if you have deposited large amounts, foreign travel expenditure beyond limits, etc. Business Today
Thus: Don’t assume “I earn little, so I am exempt.” You may still be required to file and it is usually better to do so proactively.
Why it matters:
- Filing helps you claim refunds (if any) and carry forward losses.
- It also creates a clean financial record, useful in securing loans, visas, etc.
- Not filing when required can lead to penalties, interest, or extra scrutiny.
2. Myth: “If TDS (Tax Deducted at Source) has been deducted, I don’t need to file ITR”
What many think: “My employer deducted tax from my salary, so I’m done. No need for me to file the return.”
Reality: TDS is merely an advance collection of tax; it doesn’t automatically satisfy your tax-filing responsibility. As per Section 139(1), the obligation to file is independent of whether tax has been deducted. Business Today+2Business Today+2
Even if TDS covers your total tax liability:
- Filing ITR lets you claim refunds if TDS > actual tax owed.
- You also can carry forward losses, show investments and have proper documentation.
- Some threshold conditions (like foreign assets, high value deposits) may require you to file regardless of TDS. ABP Live+1
Takeaway: Always check whether you meet the filing criteria. Don’t rely solely on “TDS happened” as the exit.
3. Myth: “If I miss the deadline, I can’t file the ITR at all”
What many think: Once the deadline (commonly July 31 for many taxpayers, though extended in some years) passes, you’re locked out — no filing, no refund, nothing.
Reality: The law allows for belated returns under Section 139(4). You can file your return after the due date, subject to certain limits and penalties. NDTV Profit+2Newstrack English+2
However:
- Late filing means you may face a fee (under Section 234F), interest on unpaid tax and you may lose the benefit of carrying forward losses.
- Some forms and options may be restricted once deadlines pass.
- It’s better to file on time, but if you miss it, don’t assume all is lost — act quickly.
Practical tip: If deadline has passed, gather all your income and deduction documents, calculate liability/refund, file the applicable ITR form as soon as possible, and pay any due tax or interest
4. Myth: “Gifts, savings interest, small incomes are always tax-free / don’t matter”
What many think: “Oh, I got some small gifts from friends, or interest from a savings account and I’m sure it doesn’t need to be reported.”
Reality: There are many rules about what is taxable, what needs to be reported, and what might be exempt only up to a threshold. Believing the blanket statement “small = no reporting” is risky.
Examples:
- Gifts from specified relatives are tax‐free (under Section 56) regardless of amount. Gifts from non‐relatives are exempt only up to ₹ 50,000 in a financial year; above that entire amount becomes taxable. ET Now+1
- Interest from savings, FDs, other sources: while some may fall under “income from other sources”, they may still require disclosure in ITR. Also, failing to report can trigger notices. TaxGuru
- Agricultural income may be exempt under Section 10(1) but if you have agricultural plus non-agricultural income, it must be disclosed and may affect tax-computation. Atik Bhayani & Associates
Bottom line: Don’t assume “It’s small so I can skip.” When in doubt, disclose transparently.
5.Myth: “Filing ITR completes everything”
What many think: “Okay I submitted my ITR, done. No further action.”
Reality: Filing is only part of the process. Verification, matching forms/data (like Form 26AS, Annual Information Statement (AIS)), reconciling income and TDS are also critical. Failing to verify will render the return invalid under Section 139(8). Atik Bhayani & Associates+1
Other aspects:
- Selecting the correct ITR form (ITR-1, ITR-2, etc.) is essential. Wrong form can lead to rejection. India Today+1
- Matching your income with Form 26AS (which the tax department has) helps avoid mismatches and notices. The Indian Express+1
- Filing early can help you claim refunds quicker, but filing too early (before TDS certificates or SFT updates) might cause mismatches. The Economic Times
Therefore: Treat ITR filing as a process — preparation, submission, verification — not a single “hit and forget” step.
6.Beyond the Big Five: Why these myths stick and how you can better prepare
Why do such myths persist?
- Tax language feels technical and complex for many — leading to shortcuts or assumptions.
- Social/business circles pass on “tips” or “heard from someone” beliefs (e.g., “my friend didn’t file for years”).
- Fear of complexity causes taxpayers to avoid understanding fully and rely on partial knowledge.
- Intermediaries (not always professional) may propagate simplified “rules” to clients.
- Changes in laws/regulations each year cause confusion and outdated beliefs propagate.
How to prepare smarter & avoid pitfalls
- Collect documents early: Salary slips, Form 16/16A, TDS certificates, interest certificates, investment proofs, rent receipts, capital gains documents.
- Use official sources: The official portal (Income Tax Department e-filing website), trusted advisors. Avoid believing unverified tips.
- Reconcile your data: Check Form 26AS (shows TDS deduction, tax paid) and AIS (shows high-value transactions) before filing.
- Choose the correct ITR form: Based on whether you have salary, business income, capital gains, foreign assets, etc.
- Elect the correct tax regime: The new vs old tax regime choice matters — weigh benefits.
- File on time, and verify: Filing early gives you time to address clarifications; verifying promptly ensures your return is valid.
- Keep records for 6-7 years: Receipts, proofs, investment statements — the Income Tax Act retains scope for scrutiny for prior years.
- Correct mistakes: If you realize you filed incorrectly, you can revise your return (within timeline) — don’t ignore it.
- Avoid “too good to be true” refunds/offers: Fraudulent intermediaries lure with big refunds too easily — this could backfire. Business Today
- Stay updated: Tax laws and thresholds change every year — make sure you refer to current financial year data.
7. Quick Summary of the Myths & Realities
| Myth | Reality |
|---|---|
| Only the rich pay tax or file ITR | Anyone earning above threshold or meeting provisions needs to file. |
| TDS deducted → I don’t need to file | TDS is advance tax; filing may still be mandatory. |
| Miss deadline → can’t file at all | You can file belated returns though penalties may apply. |
| Small gifts/savings/income don’t matter | Many thresholds and exceptions mean you still may need to disclose. |
| Filing ITR = done & dusted | Verification, correct form, reconciliation of data matter too. |
8. Final Thoughts
Taxes may never be fun, but they become much less stressful when you approach them with clarity instead of confusion. By debunking the myths above, you’re better equipped to file your ITR correctly, on time, and without the stress of “Did I do all right?”
Remember: tax compliance helps build your financial credibility, enables refunds, avoids unwanted notices, and keeps your records in good shape. Whether you are a salaried employee, freelancer, business person, investor, or just someone with savings — ignoring your tax duties or relying on assumptions puts you at risk.
Take the time this season to gather your documents, check your income and deductions, pick the right form, file early and verify promptly. Myths may abound, but armed with the right facts you can navigate your ITR filing with confidence.
Here’s to a smooth, error-free ITR filing season!
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