A transmission filter helps to prevent the debris and dirt from entering the gears and other parts of the transmission system. It sits between the transmission pan and pickup tube. A few signs of a bad transmission filter are leaking, burning smell, a noisy neutral, problem with shifting gears, etc.
A transmission filter is a key component of your automobile as it keeps pollutants out of your transmission fluid. Usually, automobile companies recommend changing transmission filters after every 45,000 kilometers, or every two years (whichever comes first). It needs replacement when the fluid becomes filthy or the filter is contaminated.