7 Common ITR Myths Debunked

It is true that if your total income is below the basic exemption limit, filing is generally not compulsory. But treating that as a reason not to file is usually a mistake. You should still file if any of the following apply:

There is also a set of conditions that make filing mandatory even when your income is below the threshold - for instance, large deposits in current accounts, high-value foreign travel spending, or substantial electricity bills, as specified by the department. Holding foreign assets or foreign income makes filing compulsory too.

The return is not a salary document. Anyone with taxable income files, and the form simply changes with the nature of that income:

If you are unsure which form fits your income, our guide on how to file ITR online walks through the selection.

This is the most financially dangerous myth on the list, because it tempts people into inflating claims.

A deduction reduces your taxable income. It does not create a refund out of thin air. A refund arises only when the tax already paid on your behalf - through TDS or advance tax - exceeds your actual liability for the year. If no excess tax was paid, no amount of deduction produces a refund.

You can file after the due date - but it is not free, and this is where a widely repeated claim goes badly wrong. Filing late does attract a late filing fee under Section 234F, and interest under Section 234A runs on any unpaid tax from the due date until you pay.

A return filed after the deadline is a belated return. Beyond the fee and interest, filing late costs you the right to carry forward certain losses, such as business and capital losses, to set off against future income. That can be far more expensive than the fee itself.

For the exact deadlines and what a belated return involves, see our guide to the ITR filing last date for FY 2025-26.

This gets the risk exactly backwards. Returns are selected for scrutiny largely through a computer-assisted selection system that flags specific risk indicators - mismatches between your declared income and the data the department already holds, unexplained high-value transactions, or claims that are inconsistent with your profile.

Not filing does not make you invisible. The department receives information about your income and transactions from employers, banks, and registrars regardless of whether you file. A return that reconciles cleanly with that data is what keeps you out of trouble - not silence.

Form 16 shows the TDS your employer deducted and deposited. It is not a statement of what you are owed back.

Your refund, if any, is the difference between total tax paid on your behalf and your actual tax liability for the year. If your employer deducted Rs 2,00,000 in TDS and your final liability works out to Rs 1,20,000, your refund is Rs 80,000 - not the Rs 2,00,000 printed on the form.

Deductions are among the most heavily cross-verified items in the return. The department receives reporting from a wide range of sources, and your Annual Information Statement (AIS) and Form 26AS already reflect much of it:

Before you file, reconcile your return against your AIS and Form 26AS. A mismatch is the single most common trigger for a notice, and it is almost always avoidable.

Is filing an ITR compulsory if my income is below the exemption limit?

Generally no, but it is often still worth doing - it is the only way to claim a TDS refund, and it builds the financial record lenders and consulates ask for. Certain conditions, such as holding foreign assets or specified high-value transactions, make filing mandatory regardless of income.

Does filing late attract a penalty?

Yes. A late filing fee applies under Section 234F, and interest under Section 234A accrues on any unpaid tax. You also lose the ability to carry forward certain losses. Any claim that late filing carries no penalty is incorrect.

Do deductions increase my refund?

No. Deductions reduce your taxable income, which reduces your tax liability. A refund arises only where the tax already paid on your behalf exceeds that liability.

Will filing a return increase my chances of being scrutinised?

No. Scrutiny is driven by risk indicators such as mismatches with third-party data, not by the act of filing. Filing a return that reconciles with your AIS and Form 26AS is what reduces your risk.

How do I know my claimed deductions will hold up?

Keep the underlying proof - premium receipts, investment statements, rent agreements - and check that what you claim is consistent with your AIS and Form 26AS before you file.

Most tax trouble starts with confident bad advice. Regikart's Chartered Accountants handle your income tax filing end to end - selecting the right form, reconciling your income against Form 26AS and the AIS, and claiming every deduction you are actually entitled to.

If you are choosing between regimes, our old vs new tax regime comparison is a good place to start. Regikart works from Kolkata (head office), Delhi and Bengaluru, and serves clients across India online. Our in-house CA team files returns that stand up to scrutiny for 250+ clients, wherever you are based. Talk to a Regikart CA before you file.