Despite growing awareness around money and taxes, many Indians still fall for common tax myths - some passed down over years, others born out of confusion or half-truths. The result? Missed refunds, penalties, and lost financial opportunities.

Let’s bust some of the most common myths and see how they could be hurting your pocket.

Myth 1: If I earn below ₹5 lakh, I don’t need to file taxes.

The truth: You may not have to pay any tax if your annual income is below ₹5 lakh after deductions, thanks to Section 87A rebate. But that doesn’t automatically mean you’re exempt from filing returns.

What it costs you:

• Missed refunds: If TDS (tax deducted at source) was taken from your salary or FD, you’ll only get it back if you file your ITR.
  
  
• No proof of income: ITR filings are often required for loan applications, visas, and government subsidies, even if your income is low.

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Myth 2: TDS is already deducted, so I don’t need to file.

The truth: TDS (Tax Deducted at Source) is only a partial payment towards your total tax liability. It doesn't replace filing an income tax return.

What it costs you:

• Mismatch trouble: If your actual income is higher than what’s been accounted for in TDS, you may still owe more tax. Not filing could trigger a notice from the Income Tax Department.
  
  
• Loss of refunds: If more TDS was deducted than necessary, you won’t get the excess back unless you file your return.

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Myth 3: Only salaried people need to worry about taxes.

The truth: Anyone earning above the basic exemption limit, whether through a job, freelancing, business, or rental income needs to file returns.

What it costs you:

• Freelancers and gig workers often skip tax filing due to lack of formal salary slips. This can lead to under-reporting and future penalties.
  
  
• Side income like tutoring, influencer earnings, or crypto gains are all taxable. Ignoring them could lead to scrutiny.

Myth 4: Filing taxes is optional if I don’t owe anything.

The truth: Filing isn’t just about paying tax; it's about reporting income, even if your tax liability is zero.

What it costs you:

• No record, no benefits: ITR acts as your financial identity. Not filing can affect your ability to get a home loan, credit card, or even a rental agreement in some cases.
  
  
• Can’t carry forward losses: Let’s say you had losses in stocks or crypto this year. If you don’t file, you lose the chance to adjust those losses in future years.

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Myth 5: Filing taxes is a hassle – I’ll just skip it.

The truth: Filing taxes has become much simpler in recent years with online platforms, auto-filled forms, and quick verification options.

What it costs you:

• Late fees: Even a day’s delay can cost you ₹1,000 - ₹5,000 in late filing penalties.
  
  
• Higher stress later: Ignoring taxes today may feel convenient, but it only builds more pressure and confusion later when you need to “clean up” years of inaction.
  
  

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The Bottom Line

Understanding the truth behind these common tax myths can make a big difference to your financial journey. Filing your taxes is a smart step toward building a more secure future. It helps you stay organised, access refunds you're entitled to, and present a strong financial record when it matters most.

Think of it as a yearly check-in with your finances - one that empowers you, gives you clarity, and sets you up for bigger goals. With the right knowledge and a little planning, tax season can become less stressful and a lot more rewarding.