Introduction:
Myths about filing ITR can land even the most conscientious taxpayer in trouble. Increased digital monitoring and artificial intelligence-driven audits by the Income Tax Department make it impossible to turn a blind eye to hearsay or partial truths while filing ITR electronically. Something that was a casual presumption can cost you money or land you in trouble legally later.
In this manual, we’re dismantling 7 hazardous ITR filing myths that will land you in the notice book — or worse. You may be working, a freelancer, or a business owner, but if you know these common myths, you’ll stay in the clear and safe this tax season.
Why You Need to Bury ITR Filing Myths
Most people think they are not required to file their returns or that someone else (like their employer, government) is doing the filing for them. These are tantamount to assumptions with risk — and also warrant penalties, withholding of refunds, or tax notices. With tougher tax regulations and web-based monitoring, myths on filing ITR have to be debunked outright.
Let us see the most prevalent myths that people think of as taxpayers — and the truth behind each and every one of them.
Myth 1 – “I Don’t Need to File ITR if My Income is Below ₹2.5 Lakh”
This is the most prevalent myth. Being a fact that the ₹2.5 lakh exemption limit is for upto 60 years of age, there are some financial responsibilities over and above this limit:
- You will have to file an ITR even when you are below ₹2.5 lakh if:
- You own more than ₹1 crore in a current account.
- You’ve spent over ₹2 lakh on international travel expenses.
- Your electricity bill for the year is more than ₹1 lakh.
- You own foreign assets or income from abroad.
The Truth: ITR must be filed in all these instances, irrespective of your income. Failure to do so results in notices.
Myth 2 – “Salaried People Don’t Have to File ITR”
The majority of salaried taxpayers feel that the tax at source (TDS) deduction by their employer exempts them from filing. It is not the case.
Filing ITR is nevertheless compulsory because:
- It helps in availing the proper refund of tax.
- You might have other income sources (interest, freelance, rent).
- It builds your money history for visa, loan and investment.
- You might need to bring forward capital losses.
The Reality: Salary earners need to file an ITR in case their overall income is more than the threshold, or in case they need to claim refunds or declare other incomes.
Myth 3 – “I Can Avoid Reporting My Other Income”
It is one of the more dangerous myths regarding filing ITR. Individuals are likely to overlook interest income (FDs, savings accounts), freelancing earnings, rent income, or minor capital gains.
These days, the Income Tax Department utilizes the following tools:
- Form 26AS: An extensive tax credit statement.
- Annual Information Statement (AIS): It keeps a record of all your transactions.
- PAN-Aadhaar linking: All financial activities can be traced.
The Reality: Any mismatch between your actual income and what’s reported can lead to an IT notice or scrutiny assessment.
Myth 4 – “TDS Is Already Deducted, So I’m Safe”
Yet another common myth is that TDS deduction prevents filing of an ITR. People believe that as the tax has already been deducted, nothing needs to be done.
Why it’s wrong:
- The TDS deducted may not match your actual tax payable
- You won’t be refunded if you don’t file.
- Filing your ITR is the only way to fully disclose your complete financial profile.
The Fact: Filing ITR and TDS are distinct from one another. You still need to file an ITR even if you take the entire TDS, given that your entire income is above the exemption limit.
Myth 5 – “Late Filing of ITR Is No Big Issue”
Late filing is at times considered to mean delayed refund or no impact at all. Late filing does have some implications, however:
- Late filing penalty of ₹5,000 under Section 234F.
- Interest under Section 234A.
- Non-availability of carry forward of loss (for example, business loss or capital loss).
- It will also have an impact on your credit score and financial position.
Reality: It is correctable after being filed for submission to avoid penalty and retain financial profit.
Myth 6 – “Once ITR Is Filed, I Can’t Correct It”
Fool’s errand is done — incorrect bank account, lost income, or lost deductions. No one believes that the return submitted, it’s done.
- Not so. The law permits filing of a revised ITR on or before the last date of the assessment year or before the processing of return, whichever is earlier.
The Truth: You may make mistakes in your ITR — but do it quickly before penalty and scrutiny.
Myth 7 – “I Can File My ITR Without Any Help”
Salaried with uncomplicated finances may be manageable, but most taxpayers have more:
- Capital gains on realty or mutual funds.
- Foreign income or assets.
- Business income.
- Freelancing with multiple heads of income.
- Using an incorrect ITR form or leaving out key information can result in your return being rejected or trigger legal action.
The Reality: It’s better to hire someone to assist with complex returns to avoid errors, get the maximum deductions, and be absolutely on line.
Avoid Trouble by Busting Common ITR Filing Myths
It’s not just that it makes your filing wrong — it gets you into serious trouble, both legal and financial.
Here’s what you can do:
- Make sure to verify your income details against Form 26AS and the Annual Information Statement (AIS) for accuracy.
- Announce all sources of income — small and large.
- Select the correct ITR form.
- Submit on time.
- Seek a tax expert if unsure.
How the IT Department Tracks You
Those were the times when tax evasion was never detected. Now, the Income Tax Department employs AI programs to:
- Track bank deposits, credit card spends, investments, and big-ticket purchases.
- Detects mismatches in TDS, SFT (Specified Financial Transactions), and ITR.
- Catch abnormal patterns of income or underreporting.
- In short, your financial footprint is visible — and believing in myths only increases your audit risk.
Conclusion: Bust the Myths, Not Your Finances
Tax compliance is not optional — and ITR filing myths can be costly. Whether you’re trying to save time, avoid complexity, or just misinformed, the consequences of wrong filing are real.
Instead of following century-long traditions, decide to stay focused, focused, and attuned. A clean financial history assists you in all things — from credit and loans to visas and investments.
Pandit or accountant doesn’t know how to prepare ITR without errors? LEGAL DALAL can assist you with professional tax accounting experts who facilitate it for you and make you 100% compliant.
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