Myth 1: If TDS is deducted, I don't need to file an ITR.
This is one of the most common and dangerous myths. Tax Deducted at Source (TDS) is simply an advance tax collected by your employer or bank on your behalf. It is not the final settlement of your tax liability. Filing an Income Tax Return (ITR) is mandatory
for several reasons, even if TDS has been cut. First, your total tax liability may be higher or lower than the TDS deducted. You might have other income sources (like interest, freelance work, or capital gains) that your employer doesn't know about. Filing an ITR is the only way to declare all your income, claim eligible deductions, and either pay the balance tax or claim a refund for any excess TDS paid. In fact, filing is mandatory if your gross total income exceeds the basic exemption limit, regardless of TDS. Not filing can lead to notices and penalties from the tax department.
Myth 2: I can file my ITR anytime, the deadline isn't strict.
While you can file a 'belated return' after the due date, it comes with significant consequences. For most individuals, the deadline for the Assessment Year 2026-27 is July 31, 2026. Missing this date means you'll face a late filing fee under Section 234F, which can be up to ₹5,000. More importantly, you'll have to pay interest at 1% per month on any outstanding tax liability. Perhaps the biggest loss is that you cannot carry forward certain losses (like those from business or capital gains) to set off against future income if you file late. While a belated return can be filed until December 31, 2026, the financial penalties and loss of benefits make it a costly delay.
Myth 3: Interest from my savings account is tax-free.
This is a half-truth that can lead to errors. Interest earned from a savings bank account is indeed taxable and must be reported under 'Income from Other Sources'. The confusion arises from Section 80TTA of the Income Tax Act, which allows individuals (not senior citizens) to claim a deduction of up to ₹10,000 on this interest income. However, this is a deduction, not an exemption. You must first report the *entire* interest earned across all your savings accounts and then claim the deduction up to the ₹10,000 limit. Any interest income above this amount is added to your total income and taxed at your applicable slab rate. Banks typically do not deduct TDS on savings account interest, so the responsibility to report it lies entirely with you.
Myth 4: I can claim HRA exemption without any documents.
Claiming House Rent Allowance (HRA) exemption without proper proof is a red flag for the tax department. While you don't need to attach documents when you file your return, you must have them on hand in case of scrutiny. To legitimately claim HRA, you need a valid rental agreement with your landlord. You must also have rent receipts as proof of payment. For rent payments exceeding ₹1 lakh annually, providing your landlord's PAN is mandatory. If you live with your parents and pay them rent, you can claim HRA, but you should have a formal rental agreement and proof of bank transactions to establish a genuine landlord-tenant relationship. Remember, HRA exemption is available only under the old tax regime.
Myth 5: I don't need to verify my return after filing.
Filing your ITR is only the first step. The process is incomplete until you verify it. An unverified return is considered invalid, as if you never filed it at all. You have 30 days from the date of filing to complete the verification process. The easiest methods are electronic, such as using an Aadhaar-based OTP or through your net banking portal. Alternatively, you can physically sign the ITR-V acknowledgment form and mail it to the Centralised Processing Centre (CPC) in Bengaluru. Only after verification will the Income Tax Department process your return, issue any applicable refunds, and close the loop on your annual tax compliance.
