New Delhi, India – As the deadline for filing your Income Tax Return (ITR) for the Financial Year 2024-25 approaches, a common question arises: is it necessary to file a return if your annual income is below the basic exemption limit?
The general rule is no. Under the New Tax Regime (which is the default option), individuals with an annual income up to ₹3 lakh are not required to file an ITR. For those opting for the Old Tax Regime, this limit is ₹2.5 lakh (for individuals below 60).
However, this rule comes with several important exceptions. Certain financial activities make it mandatory to file an ITR, regardless of your income level.
When Filing ITR is Mandatory, Regardless of Your Income
Even if your income is below the exemption limit, you must file an ITR if you meet any of the following conditions during the financial year:
- High-Value Bank Deposits: Deposited more than ₹1 crore in total into one or more current accounts.
- Significant Foreign Travel Spending: Spent over ₹2 lakh on travel to a foreign country for yourself or someone else.
- Large Electricity Bills: Paid an electricity bill exceeding ₹1 lakh in the year.
- Substantial Tax Deducted (TDS): Had a total Tax Deducted at Source (TDS) of ₹25,000 or more (this limit is ₹50,000 for senior citizens).
- Foreign Assets: Own any assets abroad or have signing authority in a foreign bank account.
The 5 Key Benefits of Filing an ITR Voluntarily
Even if you are not required to file, doing so voluntarily is a smart financial practice that offers several advantages:
- Claim Tax Refunds: If TDS was deducted from your income (like on a fixed deposit), filing an ITR is the only way to claim that money back as a refund.
- Act as Proof of Income: An ITR is a government-backed, credible proof of income, often required by banks for loan approvals (home, auto, personal) and by credit card companies.
- Smooth Visa Applications: Most embassies and consulates require ITR documents for the past few years as part of the visa application process.
- Carry Forward Losses: Filing an ITR allows you to carry forward losses from capital gains or business to offset against future income, thereby reducing your future tax liability.
- Build a Financial History: Regularly filing your ITR builds a strong compliance record with tax authorities and can positively impact your credit score and financial profile.
The Bottom Line
For the current filing season (FY 2024-25), you are exempt from filing an ITR if your income is below ₹3 lakh (New Regime) or ₹2.5 lakh (Old Regime), provided you do not meet any of the mandatory filing conditions listed above.
However, the long-term benefits of voluntary filing—from securing loans to claiming refunds—make it a prudent choice for sound financial planning.
Disclaimer: This article is for informational purposes only and should not be considered tax advice. Please consult a certified tax professional for guidance tailored to your specific financial situation.
