Myth 1: My Employer Deducted TDS, So I'm Done
This is one of the most pervasive and dangerous misconceptions. Tax Deducted at Source (TDS) is just an estimated tax paid on your behalf by your employer. It does not equal filing your Income Tax Return (ITR). Filing an ITR is mandatory if your gross
total income exceeds the basic exemption limit. Your employer's TDS calculation is based only on the salary and investment declarations you provide to them. It doesn't account for other earnings, such as interest from savings accounts or fixed deposits, capital gains from investments, or rental income. Filing the ITR is how you provide a complete picture of all your income to the tax department and pay the final, accurate tax amount.
Myth 2: I Only Need My Form 16 to File
While Form 16 is the cornerstone document for a salaried person, relying on it exclusively is a frequent error. The tax department now has two powerful tools: the Annual Information Statement (AIS) and Form 26AS. The AIS provides a comprehensive summary of all your financial transactions reported by various entities like banks, mutual fund houses, and property registrars. Form 26AS is your tax passbook, showing all taxes credited against your PAN. Before filing, you must reconcile the information in your Form 16 with both your AIS and Form 26AS. Any mismatch, such as undeclared interest income that shows up in your AIS, is a red flag for the tax department and a primary trigger for notices.
Myth 3: All My Income Is Salaried, So I'll Use ITR-1
Choosing the correct ITR form is crucial. Filing with the wrong one can render your return 'defective', leading to processing delays and potential invalidation if not corrected. ITR-1 (Sahaj) is the simplest form, but it's only for resident individuals with a total income up to ₹50 lakh from salary, one house property, and other sources like interest. However, if you have any income from capital gains (e.g., from selling stocks or mutual funds), income from more than one house property, or are a director in a company, you cannot use ITR-1. In such cases, you would typically need to file ITR-2 or another applicable form. Always verify the correct form based on all your income sources for the year.
Myth 4: Section 80C Is the Only Deduction That Matters
Many taxpayers focus solely on the popular ₹1.5 lakh limit under Section 80C and overlook other valuable deductions available under Chapter VI-A. For instance, you can claim a deduction for health insurance premiums paid for yourself, your family, and your parents under Section 80D. There are also deductions for interest paid on an education loan (Section 80E), donations to specified funds (Section 80G), and interest earned on a savings bank account up to ₹10,000 (Section 80TTA). Ignoring these can lead to you paying more tax than necessary. Review all your expenses and investments to ensure you claim every deduction you are legally entitled to.
Myth 5: The Deadline Is Far, I'll File Later
Procrastination is the enemy of accurate tax filing. While the deadline for filing ITR for the Assessment Year 2025-26 (for income earned in FY 2024-25) might be a few months away, waiting until the last minute is a recipe for disaster. The last-minute rush often leads to errors like entering incorrect personal details, forgetting to report an income source, or failing to verify the return. Filing after the due date results in a late filing fee, interest on the outstanding tax liability, and the inability to carry forward certain losses. More importantly, filing early gives you ample time to gather documents, reconcile your statements, and rectify any errors without pressure.
