Filing income tax returns (ITRs) is an important annual financial task for many salaried and self-employed professionals. The ITR filing season for FY 2024-25 (Assessment Year 2025-26) is already underway. It’s necessary for all the individuals who earn an amount above the exemption limit to file income tax returns.  

Despite the ITR filing being a common annual exercise, confusions still surround many aspects of reporting incomes from all sources and deduction claims. From social media forwards to advice from unverified sources, taxpayers often fall for half-truths in the run up to the last date to file ITR.

Let’s debunk five of the most common income tax myths so you can file your returns with clarity and accuracy.

1) Myth: If my employer deducts TDS, I don’t need to file ITR

Reality: Many salaried individuals assume that since their employer deducts TDS (Tax Deducted at Source), their tax-related responsibilities are over. This isn’t true. TDS only ensures that tax is collected in advance. Filing the income tax return is your responsibility and it’s mandatory if your gross income exceeds the basic exemption limit. It also helps you claim refunds and carry forward losses.

2) Myth: Only the rich need to pay income tax

Reality: This is a widely believed myth. Income tax applies to anyone whose total annual income crosses the exemption threshold. Even if you’re a freelancer, a small business owner, or earning through investments, you may still be liable to pay tax. Tax liability is based on income, not on how rich someone is perceived to be.

3) Myth: I can’t file ITR if I missed the deadline

Reality: While it’s ideal to file your ITR by the due date (usually July 31), you can still file a belated return until December 31 of the same assessment year. But belated returns attract penalties and interest. So, while it’s not too late, it’s best to act quickly.

4) Myth: Gifts from family and friends are always taxable

Reality: Not all gifts are taxable. Under Section 56 of the Income Tax Act, 1961, gifts from specified relatives (like parents, siblings, and spouse) are completely tax-free, regardless of the amount. Gifts from non-relatives are tax-exempt only if the total value is up to Rs 50,000 in a financial year. Beyond that, the entire amount becomes taxable in the hands of the receiver.

5) Myth: Investing in tax-saving schemes is optional

Reality: If you want to reduce your taxable income, investments under Section 80C (like PPF, ELSS, LIC premiums, etc.) are important. While not mandatory, not using these deductions means you could end up paying more tax than necessary. Planning early and wisely can help you save up to Rs 1.5 lakh under Section 80C alone.

Income tax computations could seem daunting, but understanding the facts behind common myths makes the process convenient. Instead of relying on hearsay, always verify information through official sources like the Income Tax Department website or consult a trusted tax expert.

. Read more on Personal Finance by NDTV Profit.Many taxpayers fall for common income tax myths that can lead to costly mistakes. Here are some important factors to know for error-free ITR filing.  Read MorePersonal Finance 

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