Why are taxpayers struggling with the 'reason for filing ITR' question this year? Tax experts explain

To understand why this seemingly simple question is causing so much confusion, Upstox News spoke to chartered accountants and tax experts.

According to CA Siddharth Maurya, Managing Director of Vibhavangal Anukulkara Pvt Ltd, the confusion stems from the gap between what taxpayers are trying to do and the language used in the tax law.

"The very common confusion about the 'Reason for Filing ITR' comes from a mismatch between what a taxpayer basically means to do, like doing a civic duty, and the heavy, intimidating language inside the Income Tax Act. People just get stuck when they see words like 'belated' or 'revised', because they feel those terms mean something shady, or they think penalties will automatically follow. That fear is also made worse by the small amount of guidance that actually appears on screen and by the way financial literacy is not taught in a neat, stepwise manner in our education system. A lot of folks worry that if they pick the wrong option, it could end up tagging their return for extra checks, or it may slow down their refund. So honestly, this isn’t a simple user mistake; it’s more like a wider systemic gap, where the tax setup is not being translated into something clearer for the everyday citizen," said CA Siddharth Maurya

Shourya Garg, Advocate at Garg & Garg Tax Associates, says taxpayers often get confused because several options appear similar even though they apply to different situations.

"This field trips up more people than it should, mostly because the options sound similar but carry very different implications. Someone filing simply because their income crossed the basic exemption limit is in a completely different bucket from someone filing only because of one of the mandatory conditions, like high foreign travel spend or large deposits, even if their actual taxable income is below the limit.

Taxpayers often pick the first option that seems to loosely apply, without realising the wrong selection can flag the return for the wrong kind of scrutiny later. It genuinely needs a slower read before answering," explained Shourya Garg.

Rakesh Goel, Lead Consultant at AQUILAW, says many taxpayers mistakenly believe there is only one "correct" answer, even when multiple reasons may apply.

"The most common confusion being observed is around the newly introduced 'reason for filing ITR' field. Many taxpayers assume that selecting an incorrect reason could affect their tax liability or invite scrutiny. In reality, the field is largely intended to identify the statutory basis that makes filing of the return necessary. The confusion stems from the fact that many taxpayers satisfy multiple conditions simultaneously but expect only one 'correct' answer, making them apprehensive about making a wrong selection," explained Rakesh Goel.

According to CA Abhishek Soni, CEO & Co-founder, Tax2winMany, taxpayers are confused because they don't know which option to select.

Here's a simple way to choose:

-Taxable income above the exemption limit: If your

• Claiming a tax refund: If you want to get back excess TDS or tax paid.

• Carrying forward losses: If you want to carry forward losses from shares, mutual funds, business, etc.

• Mandatory filing: If the Income Tax Act requires you to file even if your income is below the exemption limit.

• Others: If none of the above apply but you still want to file your ITR.

Tax experts encourage taxpayers to carefully consider each option rather than choosing the first one that seems relevant because multiple reasons may apply in some situations. Before filing the return, they advise obtaining expert advice if there is any doubt.