Who Should File ITR in India?

Filing an Income Tax Return (ITR) is a crucial responsibility for every taxpayer in India. While many believe that only individuals with high incomes need to file ITR, the reality is that several other categories of people are legally required—or strongly advised—to do so. Whether you’re a salaried employee, a business owner, a freelancer, or a homemaker with investments, you may fall under the ambit of tax filing.

In this article, we’ll explain who should file ITR in India, why it’s important, and what benefits it offers—even for those with incomes below the taxable limit.

What is Income Tax Return (ITR)?

An Income Tax Return (ITR) is a form through which individuals, companies, and other entities report their income, deductions, and taxes paid to the Income Tax Department of India. Based on this information, the department calculates whether the taxpayer owes more tax, has paid excess tax (and is due for a refund), or is fully compliant.

The income reported may include:

• Salary
• Business or professional income
• House property income (including rent)
• Capital gains
• Income from other sources (interest, dividends, etc.)

Who is Required to File ITR in India?

The Indian government mandates ITR filing in several specific scenarios. Here’s a detailed breakdown of individuals and entities who must file an ITR:

1. Individuals with Income Above the Basic Exemption Limit

If your gross total income (before deductions under Section 80C to 80U) exceeds the exemption limit, you are legally required to file an ITR.

Basic Exemption Limits for FY 2024-25 (AY 2025-26):

• Under the old regime:
• ₹2.5 lakh (below 60 years)
• ₹3 lakh (60 to 80 years)
• ₹5 lakh (above 80 years)
• Under the new regime:
• ₹3 lakh (for all individuals)

If your income exceeds these limits, you must file an ITR—even if no tax is payable after deductions.

2. Individuals Who Want to Claim a Tax Refund

Even if your income is below the taxable limit, you should file an ITR if tax has been deducted at source (TDS)—for example, from salary, fixed deposits, or professional income.

By filing your return, you can claim a refund of the excess tax paid.

3. Self-Employed Professionals and Businesses

Freelancers, professionals, and business owners (including sole proprietors) must file ITR if their total income exceeds the threshold. Additionally, if you want to:

• Opt for presumptive taxation under Section 44ADA or 44AD
• Carry forward business losses
• Declare income from freelancing or digital platforms

—then filing an ITR is mandatory, even if your income is below the exemption limit.

4. Individuals with Foreign Assets or Foreign Income

If you are a resident individual and you:

• Hold any foreign bank account
• Own shares or mutual funds in a foreign country
• Have signing authority in any foreign account
• Receive income from a foreign source

—then you are required to file ITR, regardless of your income level.

5. Companies and Firms (Including LLPs)

All companies, partnership firms, and LLPs must file an ITR irrespective of profit or loss during the financial year. Even if no business activity took place, ITR filing is mandatory.

6. Individuals with High-Value Transactions

As per Rule 12AB of the Income Tax Rules, you must file ITR even if your income is below the exemption limit if you meet any of these criteria:

• Deposited more than ₹1 crore in a current account
• Spent more than ₹2 lakh on foreign travel
• Paid more than ₹1 lakh as electricity bill
• Total TDS/TCS is ₹25,000 or more (₹50,000 for senior citizens)
• Business turnover exceeds ₹60 lakh or professional receipts exceed ₹10 lakh
• Interest income exceeds ₹10,000 from a savings account

7. Residents with Exempt Long-Term Capital Gains

If you earned long-term capital gains that are exempt under Section 10(38) (such as gains from equity shares) but your total income before exemptions exceeds the limit—you should file ITR.

8. NRIs (Non-Resident Indians)

NRIs are required to file ITR in India if:

• Their income earned or received in India exceeds ₹2.5 lakh
• They have investments or rental income in India
• They want to claim TDS refunds on Indian income

Why You Should File ITR Even If Not Mandatory

Many individuals choose to file ITR voluntarily. Here’s why:

✅ Claiming TDS Refunds

If your employer or bank has deducted tax at source, filing ITR helps you claim a refund, even if your total income is below taxable limits.

✅ Proof of Income

ITR serves as a legal income proof—essential when applying for:

• Home loans
• Visa applications
• Credit cards
• Government tenders

✅ Carry Forward Losses

You can carry forward losses (such as capital losses or business losses) to offset against future income only if ITR is filed on time.

✅ Avoiding Penalties

Filing your return on time helps you avoid late filing penalties under Section 234F, which can be up to ₹5,000.

✅ Establishing Financial Track Record

Regular ITR filing helps build a credible financial history, which is useful for investment and loan approvals.

Due Dates for ITR Filing

• 31st July: For individuals and non-audit cases
• 31st October: For audit cases (businesses/firms)
• 30th November: For transfer pricing and international transactions

Late filing beyond these dates attracts penalties and interest under various sections.

Conclusion

Filing an Income Tax Return is more than just a legal formality—it’s a financially smart habit that can benefit you in numerous ways. Whether you are salaried, self-employed, a student earning from side gigs, or even a homemaker earning rental or interest income, understanding whether you're required to file ITR can help you stay compliant and make the most of the tax system.

If in doubt, file it out! It's better to be safe and compliant than sorry and penalized.