Understanding Your Income Tax Return (ITR) Obligations for FY 2024-25 (Assessment Year 2025-26)
As the deadline for filing Income Tax Returns (ITR) for the Financial Year 2024-25 (Assessment Year 2025-26) approaches, a common question arises: Do I need to file an ITR if my annual income is below the basic exemption limit? The answer depends on your chosen tax regime and specific financial activities.
Basic Exemption Limits:
- Old Tax Regime: For individuals below 60 years of age, the basic exemption limit is ₹2.5 lakh. If your income falls below this, you are generally not required to file an ITR, unless other conditions apply.
- New Tax Regime: This regime offers a higher basic exemption limit of ₹3 lakh for all individuals, irrespective of age. Therefore, if your income is below this threshold, you are typically exempt from mandatory ITR filing, unless specific circumstances dictate otherwise.
(Note: While there’s talk of the new regime’s exemption limit potentially increasing to ₹4 lakh from FY 2025-26 (AY 2026-27), this is not yet officially notified for the current assessment year.)
When ITR Filing Becomes Mandatory (Even with Lower Income):
Even if your income is below the aforementioned exemption limits, filing an ITR is compulsory if you meet any of the following criteria during the financial year:
- You’ve deposited over ₹1 crore in one or more current accounts.
- You’ve spent over ₹2 lakh on foreign travel.
- Your electricity bills for the year collectively exceed ₹1 lakh.
- The Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) on your income is ₹25,000 or more (or ₹50,000 or more for senior citizens).
- You own any foreign assets or hold signing authority in a foreign account.
- You are a Director of any company (Indian or foreign).
- You hold unlisted equity shares.
- Your gross receipts from business exceed ₹60 lakh (under presumptive taxation schemes).
- Your gross receipts from profession exceed ₹10 lakh (under presumptive taxation schemes).
- You have deposited more than ₹50 lakh in one or more savings bank accounts.
Why File ITR Voluntarily? Key Benefits:
Even if you’re not legally obliged, voluntarily filing your ITR offers several significant advantages for your financial well-being:
- Claim Tax Refunds: If any TDS has been deducted from your income (e.g., on fixed deposits), filing your ITR is the only way to claim it back.
- Robust Income Proof: Your ITR serves as an official and credible document for proving your income, which is often required for various financial transactions and applications.
- Loan and Visa Approvals: Banks, financial institutions, and embassies frequently request ITRs as a crucial part of their assessment for loan approvals (personal, home, etc.) and visa applications.
- Carry Forward Losses: Filing your ITR enables you to carry forward capital losses or business losses to future years, allowing you to offset them against future profits and reduce your tax liability.
- Build a Strong Compliance History: Consistent and timely ITR filing builds a positive tax compliance record, enhances your credit profile, and can be beneficial for future financial endeavors.
In essence, for FY 2024-25, while basic income thresholds exempt many from mandatory ITR filing, specific financial activities or the desire to leverage the numerous benefits often make voluntary filing the most prudent approach for sound long-term financial planning and establishing credibility.