Who Should File Income Tax Return?

Filing income tax returns is a duty and a mandatory requirement for anyone liable to pay income tax in the country. Here are some important reasons to file ITR in time:

• Tax and Legal Obligations: Anyone whose annual income is not below the basic exemption limit must file an ITR to fully and transparently disclose their income from different sources. Failure to comply results in late fees, interest on the due amount and imprisonment.
• Claiming Tax Benefits: Filing your returns is necessary to claim tax deductions and exemptions under various sections of the Income Tax Act. All salaried individuals can claim a standard deduction and rebates if their income is below a certain threshold.
• Tax Refunds: If the tax authority has already deducted taxes in the form of TDS (tax deducted at source), filing tax returns allows you to claim refunds on the excess amount. Not filing returns would result in the loss of the debited amount.
• Income and Address Proof: Tax return statements serve as proof of income and address. It can be used as proof of income for applying for loans, credit cards, visa processing and other financial or official applications.

Basic Exemption Limit

As mentioned above, anyone whose income is above the basic exemption limit needs to mandatorily file income tax returns. The limit is given as follows:

Other Mandatory Requirements

Other than those with a taxable income, filing ITR is also compulsory for any taxpayer who meets the following conditions:

• Businesses and Other Entities: All businesses registered as partnership firms, private limited companies, trusts and investment firms must file income tax returns. ITR is also mandatory for other entities like universities, colleges and research associations.
• Foreign Income Sources: Anyone who has invested in or earned from foreign assets must file an ITR. Same for anyone with a signing authority for a foreign account.
• Certain Classes of Taxpayers: Every Hindu Undivided Family (HUF), Association of Persons (AOP), and Body of Individuals (BOI) must file income tax returns regardless of their annual income.
• Anyone Carrying Forward Losses: Filing ITR is necessary for anyone who has reported net losses during previous years and wants to carry forward and adjust losses in the current year. This facility is available for capital gains and income from business and profession.
• Upon Payment of Certain Expenses: Taxpayers who have spent more than ₹2 lakhs on international travel, electricity bills over ₹1 lakh, and current account deposits over ₹5 crores are required to file tax returns.
• Income Over a Threshold: Anyone with a business turnover of more than ₹60 lakhs and over ₹10 lakhs of professional income must also file ITR under Section 139(1).
• Charitable Institutions: Anyone who makes income from religious trusts and charitable institutions must file tax returns under Section 139(4a).
• Total TDS and TCS: If the aggregate TDS (tax deducted at source) and TCS (tax collected at source) is more than ₹25,000, you should file income tax returns. For senior citizens, this limit is ₹50,000 in a financial year.

The following taxpayers are exempt from having to file income tax returns mandatorily:

• Income Below Exemption Limit: Anyone whose income is within the basic exemption limit does not have to file an ITR for the relevant year. However, such persons must not have any income from business or capital gains.
• Specified Senior Citizens: Any senior citizen at or above the age of 75 years who earns only pension income and interest from banks is exempt from having to file tax returns. Such persons have to provide a declaration to this effect to the bank or post office.
• Non-Residents: Any non-resident who does not have any income in India for the previous year is not required to file any tax return.
• Certain Classes: The government has the liberty to issue notifications to exempt certain persons or groups of people from filing income tax returns.

Any non-resident Indian (NRI) is required to file a return of income if they have any income in India, even if it is below the exemption limit. Non-residents whose income in India exceeds the basic exemption limit are liable to pay income tax. This limit is ₹4 lakhs under the new regime and ₹2.5 lakhs under the old regime for the financial year 2025-2026.

There are no different limits for senior citizens and super senior citizens. The basic exemption does not apply if the NRI has earned short-term and long-term capital gains. Like residents, non-residents are also eligible to claim a rebate under Section 87A up to ₹60,000 under the new regime and ₹12,500 under the old regime.

Tax Slabs Under New Tax Regime

Tax Slabs Under Old Tax Regime

Individuals Below 60 Years

Individuals Between 60 and 80 Years

Individuals Above 80 Years

See Also: How to Calculate Income Tax on Salary

Step 1: Visit the e-filing Website

On the e-filing website, click “Login”. Next, enter your PAN and hit “Continue”. Now, tick in the security message box, enter your password, and hit “Continue” again.

Step 2: Navigate to “File Income Tax Return”

On the top menu bar, go to “e-File” -> “Income Tax Returns” -> “File Income Tax Return”.

Step 3: Choose Your Assessment Year

Select the assessment year for which you are filing your ITR (e.g., AY2026-27 for income earned in FY25-26).

Step 4: Select Your Filing Status

On the following page, you will be required to choose your filing status from the given options: Individual, HUF, or others. Choose “Individual” and then “Continue”.

Step 5: Select the Right ITR Category

Next, select the ITR form applicable to your scenario. For instance, if you are a salaried individual with no other income, choose ITR-1. You can check out your applicable ITR type in the above section.

Step 6: Select the Reason

In the next section, you will be requested to fill in the reason for filing your ITR. You need to select the option that aligns with your situation:

• Your gross income exceeds the basic tax exemption limit.
• You meet particular criteria.
• Other reasons

Step 7: Add Bank Details

Next, fill in your bank information. If these details are automatically updated, make sure to cross-check and verify them. Then, confirm the summary of the ITR by validating all the details.

Step 8: Verify ITR

The final step to IT return filing is to e-verify your tax return. Remember, not verifying an ITR is the same as not filing an ITR at all.

There are several ways in which you can electronically verify your income tax return. You can do so via netbanking, Aadhaar OTP, EVC (Electronic Verification Code), etc.

Alternatively, you can also send a physical copy of ITR-V to Bengaluru CPC to manually verify your tax return.

See Also: How to File ITR Return

For filing tax returns on income earned during the financial year 2025-2026, the following due dates are applicable:

The consequences of not filing income tax returns can range from fines to imprisonment. Here are the penalties:

• Penalty Charges: Under Section 234F, failing to pay income tax returns within the applicable due date results in monetary fines. The late filing penalty is ₹1000 for due tax below ₹5 lakhs and ₹5000 otherwise.
• Interest on Tax: Under Section 234A, taxpayers are liable to pay interest on the outstanding tax amount for late filing of returns. The interest rate is 1% per month or part of the month when taxes are due.
• Penalty for Non-Disclosure of Foreign Income: If you fail to report your foreign assets via ITR, you can face a fine of ₹10 lakhs per year of non-disclosure. The undisclosed income is also taxed at the highest slab of 30%.
• No Carry Forward of Losses: Filing income tax returns is necessary for carrying forward losses from previous years and setting them off in the current year. Filing late returns will prevent you from carrying forward losses in future years, even if you miss filing ITR once.
• Prosecution for Not Filing ITR: When you fail to file income tax returns within the last deadline, you can be jailed upon prosecution. For tax liability below ₹25,000, you can face jail time from 3 months to 2 years, while for higher liability, you can face imprisonment from 6 months to 7 years.

If you generate an income in India that is above the basic tax exemption limit, you must file an income tax return mandatorily. Section 139 of the Income Tax Act 1961 provides a list of eligible taxpayers who must file income tax returns, as well as the requirements. Before filing returns, make sure to check the filing process, documents required and latest changes to ITR regulations.

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