Is Filing Income Tax Return (ITR) Mandatory?

Do I need to file Income Tax Return (ITR)?

It’s a question many people ask, often hoping for a simple “no” as an answer. However, the answer is not always the same. While some may be able to avoid the process, others may face unintended repercussions if they do not complete their ITR. In this article, we’ll cut through the confusion and clarify when filing your ITR is not just an option, but a legal requirement. Buckle up, because we’re about to navigate the twists and turns of mandatory ITR filing in India, with the latest updates as of January 2024.

Yes, you’re required to file an income tax return (ITR) in India depending on several factors, and the latest information as of January 2024, is:

Mandatory Filing

1. Income Exceeding the Basic Exemption Limit: Your total income, before any deductions under section 80C to 80U, must exceed the basic exemption limit for the financial year. This limit varies depending on your age:

• Individuals below 60 years: ₹2.5 lakhs
• Senior citizens (60-80 years): ₹3 lakhs (old tax regime), ₹2.5 lakhs (new tax regime)
• Senior citizens (above 80 years): ₹5 lakhs

2. Other Specific Conditions: Even if your income falls below the exemption limit, filing is mandatory under specific circumstances, such as:

• TDS/TCS Exceeding Limits: If the total Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) is ₹25,000 or more for individuals below 60 years and ₹50,000 or more for senior citizens.
• Foreign Income or Assets: If you have foreign income or assets exceeding specified limits.
• Business Income or Loss: If you have any income or loss from a business or profession.
• Claiming Tax Deductions or Refund: If you want to claim any tax deductions or receive a tax refund.

Voluntary Filing

Even if filing isn’t mandatory, you can still choose to file your ITR voluntarily. This can be beneficial for various reasons, such as:

1. Applying for Loans: Banks and financial institutions often require proof of income verification through ITRs for loan applications.

2. Visa Processing: Some countries may require ITRs for visa applications.

3. Carrying Forward Losses: If you have losses in a particular financial year, you can carry them forward for future years to offset income and reduce tax liability.

4. Building a Credit History: Regular ITR filing can help build your credit history, which can be beneficial for obtaining loans or other financial services.

Failing to file ITR when mandatory can attract penalties and legal consequences.