Who Should File Income Tax Return?

The ITR filing process is mandatory for all categories of taxpayers, including individuals, Hindu Undivided Families(HUFs), companies and partnership firms.

Individual taxpayers earning an income above the basic exemption limit must file their returns. In addition, those with income below the exemption limit may also need to file ITR under specific conditions.

Understanding these provisions and knowing when to file ITR is crucial for ensuring compliance with income tax regulations.

Here is a simple guide to help you determine who would submit income tax returns and the specific conditions that apply to them.

Before we see who is eligible for ITR, let us understand the ITR in full form.

What is ITR, and Who should File it?

ITR stands for Income Tax Return. It is a form that individuals or entities with taxable income must file and submit to the income tax authorities. It is used to report your earnings, expenses and income tax liability for a financial year. By filing the ITR, you can determine the exact amount of income tax payable after the allowable exemptions and deductions.

If there is a pending tax liability, you can pay it. If you have paid income tax beyond your actual income tax liability, you will get a tax refund after filing your income tax returns.  

There are different types of income tax return forms specific to the category of taxpayers – individuals or entities. You can file your ITR online or offline.

Who is Eligible for ITR?

Individuals and entities with taxable income in India are eligible to file income tax returns. Even if your income lies within the basic exemption limit and you are exempt from paying income taxes, it is advisable to file your ITR.

It serves as proof of your income and is submitted to the IT (Income Tax) Department. Now, let us explore the different categories of taxpayers and understand who should file the IT return.

Who Should File Income Tax Return?

Individuals with a taxable income 

If you are generating a taxable income in India, you are eligible to file an ITR.

Individuals with gross total income exceeding the basic exemption limit.

The exemption limit is different for the old and the new tax regime.

• Exemption Limit For the old tax regime:

• The exemption limit for the new tax regimeis ₹7 lakhs, regardless of age.

Salaried Individuals

If you are a salaried employee, filing an ITR is mandatory, irrespective of your income for the financial year.

Companies and Business Organisations

All companies, including private limited companies and limited liability partnerships, must file an ITR to declare their profit or loss for the financial year.

Non-Resident Indians (NRIs)

If you are a Non-Resident Indian generating any source of income in India, you must file the ITR.

Hindu Undivided Families (HUFs)

If you belong to Hindu Undivided Families and generate taxable income in India, you are required to file an ITR.

Charitable Organisations or Trusts

If you run a Trust or Charitable Organisation and earn a taxable income, you are liable to file the ITR.

Others

There are a few other taxpayers who should pay ITR even if their total income is less than the tax exemption limit. We will discuss them in the next section.

Who Should File IT Return? – For Income Less Than the Basic Exemption Limit

If You Receive Foreign Income

If you are a resident individual earning income by owning assets or investing in shares or bonds of foreign companies, you must file income tax in India.

It is also applicable to individuals who receive rental income from foreign countries.

In addition, individuals who invest in foreign assets in the name of their parents should also file an ITR.

If You Spend ₹2 lakhs and Above on Foreign Travel 

If you are a resident Indian who has spent over ₹2 lakhs on a foreign trip for yourself or any other person, you are required to file an ITR. It is applicable to money spent at once or in aggregate.

For instance, if you have spent ₹1.5 lakhs on your travel and another ₹1 lakh on your spouse’s travel to a foreign country, you are mandated to file an ITR.

If You Have Made Payments for an Electricity Bill of ₹1 Lakh

The ITR filing process is mandatory for all categories of taxpayers who have paid an electricity bill of ₹1 lakh or more. It is applicable to a single payment or an aggregate amount paid for the entire financial year.

If You Have to Claim a Tax Refund

If the TDS or the tax paid is more than your actual income tax liability, you should file an ITR to claim the tax refund.

If Tax Exemption on Capital Gains is Applicable

IT exemptions are applicable to income from capital gains. However, you will need to file an ITR on capital gains if your total income – before applying for these exemptions – exceeds the tax exemption limit.

If Total Tax Deducted (TDS) or Collected (TCS) is ₹25,000

The ITR filing process is mandatory if the TDS or TCS applicable to your income is ₹25,000 or above.

If Your Professional Income Exceeds ₹10 Lakhs

If the gross total receipts that you have received from your profession exceeds ₹10 lakhs, filing ITR is mandatory.

If Your Business’s Turnover Exceeds ₹60 Lakhs

If the gross turnover applicable to your business exceeds ₹60 lakhs, you are required to file an ITR.

If You Deposit Over ₹50 Lakhs in Your Savings Bank Account

If your deposit or aggregate deposit to multiple savings bank accounts exceeds ₹50 lakhs for a financial year, the ITR filing process is necessary.

If You Deposited ₹1 Crore in Your Current Account

If you have deposited an amount equal to or amounts that sum up to ₹1 crore or more in a current account with a bank, then you have to file your ITR.

Who is Exempted From the ITR Filing Process?

According to Section 194P of the IT Act, taxpayers 75 years or above are exempt from filing IT returns. However, this provision is subject to the following conditions:

The senior citizen:

• Should have been a resident Indian in the previous year.
• Should have an account in a bank that is notified as a specified bank by the Central Government.
• Receives only pension income or interest income.
• Interest earned from the bank is also the bank where the pension is credited.

Note: The senior citizen should submit a declaration to the bank. If it is a specified bank, the bank is responsible for the TDS and applying the deductions under Chapter VI-A and the rebate under 87-A.

When to File ITR?

Penalty Applicable to Late Filing of ITR

Interest

According to Section 234A, if you file your ITR after the deadline of 31st July, you will be liable for an interest payment.

It is at the rate of 1% per month or part of the month on the unpaid tax amount. It will be determined and calculated from the due date of the relevant financial year till the date you file the ITR.

Penalty

You will also be liable to pay a late fee of ₹5000 under Section 234F for the delay in filing the ITR. The amount is reduced to ₹1000 if your total income is less than 5 lakhs.

Not Allowed to Carry Forward Losses

In case you have incurred losses on your business, mutual funds or stock market investment, you can carry forward the losses and offset them in the following year.

However, you will not be allowed to use this option if you miss the ITR filing process before the due date.

Different Types of Income Tax Returns

How to File ITR Return?

The ITR filing process is available online and offline. You can visit the IT Department’s official website for e-filing. Explore our quick and easy guide to the steps for filing your ITR and documents required.

Benefits of Filing Income Tax Return

You Can Ensure Legal Compliance

By filing the ITR, you can ensure compliance with income tax laws and adherence to all applicable regulations.

You Can Avoid Penalties

If you file your ITR within the stipulated time, you can avoid hefty penalties and legal consequences.

You Can Claim Tax Refunds

If your TDS or the income tax amount you have paid exceeds your actual income tax liability, you can claim a tax refund by filing the ITR. You will receive the excess amount paid to your bank account.

You Can Carry Forward Your Losses

By filing the ITR, you can also carry forward your losses and offset them in the following year. The loss is applicable to your business or investment.

You Can Avail Of Loans Easily

Banks and other financial institutions need your ITR to approve your loan applications. It is applicable to both business and personal loans.

You Can Avoid Visa Rejections

Prompt ITR filing process ensures smoother visa processing and quick approvals. ITRs serve as proof of your income and financial condition, which is most required while visiting foreign countries.

How to Save on Income Tax?

You can reduce your taxable income and income tax liability by opting for savings and investment plans that offer tax deductions and exemption benefits.

For instance, Section 80C offers a tax deduction benefit for the payments made towards certain expenses, savings and investment plans. The maximum deduction limit is ₹1.5 lakhs.

Section 80D offers a tax deduction benefit* of ₹1 lakh for health premiums paid annually. You can claim this deduction for health insurance plans purchased for yourself, your family and your parents.

At Reliance General Insurance, we provide various health insurance policies online starting at ₹243 per month* to cover a wide range of medical costs. You can also customise your plan with our add-on to extend the coverage for specific illnesses, including critical illnesses like cancer.

Also Read: Section 80D - Health Insurance Tax Deductions.

Frequently Asked Questions​

• What does the basic exemption limit mean?

The basic exemption limit refers to the minimum amount of your income; it is the threshold limit up to which you are not required to pay income tax.


The income tax is calculated on your income exceeding this basic exemption limit. So, if your yearly income is below the basic exemption limit, you are not required to pay income tax.

• What is the minimum amount for ITR?

All individuals and entities with a taxable income are required to file ITR. It is mandatory for all taxpayers whose income exceeds the exemption limit – ₹2.5 lakhs (under 60 years) for the old regime and ₹7 lakhs for the new regime.

• Can I file the ITR after the due date?

Yes, you can file the ITR after the due date but before 31st December. However, you will become liable for penalties and interest payments if you miss the deadline.

• Can I file ITR without having Form 16?

Yes, you can use other documents, such as Form 26AS, salary payslips and investment records to file your ITR.

• Why do we need to file income tax returns?

The ITR filing process is important to report your earnings, expenses and income tax liability with the IT Department. It ensures you comply with the income tax laws.

Furthermore, it can help you avoid unnecessary penalties, carry forward your losses (if applicable) and claim a refund if the tax paid exceeds your actual tax liability.

• Should I file an ITR if my income is less than ₹5 lakhs?

Individuals and entities with a taxable income should file ITR. If your gross total income is greater than the basic exemption limit, you are mandated to file an ITR. It is also mandatory in certain cases when the income is less than the basic exemption limit (cases mentioned above).

The basic exemption limit differs based on your age and the tax regimes that you opt for the financial year.​

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Disclaimers:

*T&C Apply. For more details on risk factors, terms conditions, brochure, and exclusions, please read the policy wording and CIS carefully before concluding a sale.

Tax benefits: Tax benefits are subject to conditions under the Income Tax Act and amendments thereof. The tax laws are subject to amendments/changes from time to time. Please consult your tax advisor for details.

Premium: The premium mentioned is excluding taxes for single person aged between 5 years to 20 years with individual health policy for Sum Insured of ₹3 lakhs considering no adverse health conditions/pre-existing disease/medical conditions with waiting period of 3 years. For more details, please refer to the policy wordings. Premium used is 2,919/year converted into a month which gives us Rs.243/month (2,919/12).