Who should file Income Tax Return (ITR)?

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Hiral Vakil

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Last updated on June 24th, 2021

It is important to file your Income Tax Return (ITR) if your taxable income is more than the basic exemption limit. However, irrespective of the income it is mandatory to file ITR for certain income situations. Let’s look at scenarios under which it is mandatory to file an income tax return in India.

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When is it Compulsory to File ITR?

It is mandatory to file ITR under the certian conditions irrespective of the basic exemption limit:

Category Basic Exemption Limit
Individual/ HUF (Resident/ NRI) INR 2,50,000
Resident Senior Citizen Individual (60 years or more but less than 80 years) INR 3,00,000
Resident Super Senior Citizen Individuals (80 years or more) INR 5,00,000

 

Prerequisites to File ITR

General

Others

Who is required to file Income Tax Return online (e-File)?

You can also file income tax returns online using the IT Department Utility or Income Tax E-Filing website. Moreover, the IT Department has identified the following situations where e-filing of return is mandatory if:

ITR for Salaried Individuals
CA Assisted Income Tax Return filing for individuals having salary, one house property & income from other sources.
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ITR for Salaried Individuals
CA Assisted Income Tax Return filing for individuals having salary, one house property & income from other sources.
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FAQs

Do I need to file ITR if my income is less than INR 2,50,000?

No, if your gross total income for a year is less than INR 2,50,000 then you don’t need to file ITR. However, if you wish to claim a refund of TDS deducted on your income or if you wish to claim losses from the business then you should file ITR.

Do I need to file tax return if my employer has deducted TDS on salary?

Yes, you need to file a tax return even though tax has been deducted by the employer from salary. Additionally, the filing of a tax return is the responsibility of each taxpayer who is earning income in India. Hence, reporting the income earned during the year by a taxpayer and taxes paid on the same needs to be filed through ITR.

Should NRI file return?

In the case of NRI, tax return filing is not compulsory. But in the following circumstances ITR filing is mandatory:

1. NRI has earned income in India which is more than INR 2,50,000 i.e, Basic Exemption Limit.
2. NRI wished to claim a refund of TDS deducted on interest income earned in India.
3. If NRI has incurred losses in India and wished to claim the same then ITR filing is mandatory.

Can a minor file income tax return?

Income earned by a minor is taxable just like any other person. In general practice, the income of minor gets clubbed with the income of parents. Hence, the minor is not required to file a tax return. But in the following cases, filing return of minor is compulsory:

1. When minor earns income using special skills or knowledge.
2. When none of the parents is alive.

What happens if I don’t file the return?

If you do not file an income tax return, the IT department might send you a notice for filing a tax return. If you have any outstanding tax liability then you will be penalized with interest on tax liability u/s 234A, 234B, 234C, and 234F. Hence it is always advisable to file a tax return.

What are the benefits of filing return?

Following are the few benefits of filing return:

1. You can claim a refund of taxes deducted during the year,
2. You can avoid interest penalty and/or default on income earned during the year,  
3. IT Return works as documentary proof of income of an individual,
4. For loan application and visa application banks, financial institutions and consulate demand IT Returns.

Got Questions? Ask Away!

  1. Hi Aayushi,

    It is always a good practice to file your ITR and report all your financial transactions to avoid notice from the Income Tax Department. Especially after the SEBI and CBDT’s data partnership. If your total income is below the basic exemption limit, you won’t have any tax liability.

    1. If my income and Short term capital gains combined total are below:

    A. 5 lac (income until which tax is 0 using rebate) do I need to file itr or not mandatory.

    B. For below 2.5 Lac will I be needed to file itr

    In short, if I have stcg but my total income is still below the above 2 scenarios, is itr mandatory. Please tell me about both cases.

    1. Can I file business income tax myself without opting for CA assisted plan which comes when choosing business or profession itr as it includes capital gains and income from freelancing?
  2. Hi @Latesh_Bayad

    A. Yes you need to file ITR since the total income is more than the Basic Exemption limit i.e 2,50,000 INR.
    B. As per the IT Act since your income is less than the Basic Exemption limit i.e 2,50,000 INR it is not mandatory to file ITR. However, irrespective of the income it is mandatory to file ITR for certain income situations. You can refer to the below article:

    Yes, you can file the return on your own if you don’t want to opt for any assisted plan using Quicko DIY platform.

    Hope this helps :slightly_smiling_face:

    1. So if my income is below 2.5L, I would not need to file itr even if that income includes stcg? Or would I.

    2. And the DIY income tax for business and profession would also include the capital gains option?

    3. I heard there’s standard deduction for salaried employees. Is there anything for businesses as well?

  3. Hi @Latesh_Bayad

    1. Yes, as per IT Act the basic exemption limit considers the total income which including STCG.
    2. Yes, the plan for business and profession shall cover capital gains and other income as well.
    3. No there is no standard deduction in the case of business and profession
  4. Hi @royanish388, if the total income is below the basic exemption limit of INR 2.5 lakh, then there won’t be any tax liability. However, you should file your ITR and report your STCG.

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