Income Tax Return 2025: 4 Common Myths That Can Land You a Tax Notice

As the ITR filing season is in full swing, over 1 crore taxpayers have already filed their returns. While the last date has been extended to September 15, 2025, many salaried individuals still assume that they don’t need to file their return. But beware—such assumptions can invite a notice from the Income Tax Department.

Here are the most common myths and the real rules you should be aware of before skipping your income tax return (ITR) filing.

❌ Myth 1: I Don’t Need to File ITR Because TDS Is Already Deducted

Many salaried employees believe that since Tax Deducted at Source (TDS) has already been deducted by their employer, filing ITR is unnecessary. This is completely wrong.

Reality:
Even if TDS has been deducted from your salary, filing ITR is mandatory if your total income exceeds the tax exemption limit (₹2.5 lakh for individuals below 60 years of age). Also, ITR helps you:

• Claim refunds (if excess TDS was deducted)

• Maintain a clean financial record

• Process visa applications

• Show income proof for loans

Skipping ITR could lead to penalties or income tax scrutiny.

❌ Myth 2: No ITR Needed on Crypto Profits or Losses

Crypto investors often think that Virtual Digital Assets (VDAs) like Bitcoin, Ethereum, or NFTs are outside the tax net or need not be reported if there’s a loss.

Reality:
As per the Indian tax laws, crypto profits are taxed at 30% flat rate. Additionally, 1% TDS is deducted on every crypto transaction under Section 194S of the Income Tax Act.

You must file an ITR if:

• You’ve made any profit or loss from crypto trading

• You’ve deducted TDS or have had TDS deducted on VDA trades

Non-disclosure may invite penalties or notices under the VDA compliance rules.

❌ Myth 3: Foreign Income Is Not Taxable in India

Some residents think income earned from foreign sources or deposits in overseas bank accounts doesn’t need to be reported in India.

Reality:
If you are a Resident and Ordinarily Resident (ROR) under Indian tax laws, all global income is taxable in India, including:

• Salary from a foreign job

• Foreign bank interest

• Investments abroad

You must disclose all foreign assets and income in your ITR. Failure to do so could lead to a tax notice, prosecution, or penalties under the Black Money Act.

❗ Mandatory ITR Filing – Even if Income is Below the Exemption Limit

There are four specific conditions where ITR filing is mandatory, even if your income is below the basic exemption limit:

💰 High-Value Current Account Deposits: If you’ve deposited ₹1 crore or more in your current account in a financial year.

✈️ Foreign Travel: If you’ve spent over ₹2 lakh on foreign travel in a financial year.

⚡ High Electricity Bills: If your electricity consumption bill exceeds ₹1 lakh in a financial year.

💸 TDS Deducted: Even if your income is below the exemption limit, but TDS has been deducted, you may need to file ITR to claim a refund.

✅ Bottom Line: Don't Ignore ITR Filing – Even If You're Not 'Taxable'

Income Tax Return filing is not just about paying tax, it’s a key part of financial transparency and future readiness. Whether it's for home loans, visa applications, or financial planning, ITR documents are vital.

File your ITR on time, stay compliant, and avoid unnecessary tax notices or scrutiny. When in doubt, consult a tax expert or use the e-filing portal to check your ITR obligation.