ITR Series: Day 2: Do You Really Need to File ITR? Let’s Decode It.

                                                               Welcome back to Day 2 of our ITR Series!

 

In the previous blog, we introduced what Income Tax Return (ITR) is and why it matters. Today, we move one step ahead to answer a critical question that confuses many: Do you really need to file an ITR?

Let’s break it down in simple terms. Whether you’re a salaried employee, a student, a business owner, or even someone with no income at all — this article will help you understand who should file, why it matters, and how staying compliant can keep you financially secure.

 

Who Must File an ITR in India (FY 2024–25 / AY 2025–26)

 

You are legally required to file an Income Tax Return in India if any of the following conditions apply:

 

1. Your Gross Total Income Exceeds the Basic Exemption Limit

 

Category	Age	Exemption Limit (Old Regime)	Exemption Limit (New Regime)
Individual (Resident)	Below 60 years	INR 2.5 lakh	INR 3 Lakh
Senior Citizen	60 to 79 years	INR 3 lakh
Super Senior Citizen	80+ years	INR 5 lakh
Non-Resident Individual	Any age	INR 2.5 lakh

Note: If your income exceeds these limits before claiming deductions (like 80C, 80D), you must file an ITR.

 

2. You Want to Claim a Tax Refund

If TDS (Tax Deducted at Source) has been deducted from your income, but your actual tax liability is lower, filing an ITR is the only way to claim a refund.

 

3. You Have Foreign Assets or Income

If you’re a Resident and Ordinarily Resident (ROR) and hold foreign bank accounts, shares, or have earned income abroad, you are required to file an ITR, regardless of your income level.

 

4. You Have High-Value Transactions

Filing ITR is mandatory if you:

• Deposited INR 1 crore or more in a current account,
• Spent over INR 2 lakh on foreign travel, or
• Paid more than INR 1 lakh in electricity bills during the financial year.

5. You’re a Company or Firm

All companies and partnership firms, regardless of whether they have income or not, must file an ITR annually.

6.You Want to Carry Forward Losses

To carry forward business or capital losses to future years, ITR must be filed before the due date. (will be discussed in upcoming sessions)

For instance: if you run a business and incur losses instead of profits, you can carry forward these losses for up to 8 years. These can be adjusted against future income, helping you reduce your overall tax liability in the years when you do make profits.

Similarly, in today’s world where the stock market attracts many investors, it’s common for individuals to experience capital losses—often due to high-risk trades or market volatility. The good news is that such capital losses can also be carried forward for up to 8 years, provided you file your ITR before the due date. These losses can then be set off against future capital gains, subject to specific set-off rules under the Income Tax Act.

 

7.You’re a Director in a Company

Even with no taxable income, being a director in a company (private or public) makes ITR filing mandatory.

 

Who Should File an ITR , Even If Not Mandatory…

Filing a return voluntarily offers long-term benefits like financial proof and better eligibility for loans, credit cards, or visas. Consider filing if:

• You’re a student or early earner with some income.
• You’re applying for a home/education loan.
• You’re planning to travel abroad (ITR is often required for visa).
• You’re a legal heir filing on behalf of a deceased individual.
• You’re seeking to build a financial record/history for the future.

Quick Eligibility Checklist

Scenario	File ITR?
Income from salary is INR 4.2 lakh (age 30) since income is more than basic threshold/exemption limit of INR 2.5 Lakh	Yes
TDS of INR 5,000 on FD interest, income below INR 2.5 lakh	Yes (to claim refund)
Housewife with no income	Not mandatory
Business loss of INR 60,000	Yes (to carry forward loss)
Director of a company with no income	Yes

Before we end, you might be wondering — “What exactly is FY and AY?”

Here’s the answer :

• Financial Year (FY) is the year in which you earn the income
  Example: 1 April 2024 to 31 March 2025 = FY 2024–25
• Assessment Year (AY) is the year in which you file your return and get assessed for the income earned in the previous Financial Year
  Example: AY 2025–26 is when you file the return for FY 2024–25

Think of it this way: You earn in the Financial Year and get taxed in the Assessment Year!

 

Wrapping Up Day 2

Filing your ITR isn’t just about meeting legal requirements — it’s about staying financially prepared. Even if you aren’t legally required, consider filing if you foresee needing tax proof for official or financial purposes in the future.

Coming Up Next: Not all ITR forms are created equal!

Ever wondered which ITR form is right for YOU? Whether you’re a salaried employee, a freelancer, or a part-time investor — the next part of our series will help you find the perfect match.

Stay tuned — and feel free to drop questions or share this series with friends who might find it useful!