Who Should File Income Tax Return?

Everyone loves the message of salary getting credited or client payout and being processed, but come tax season, the happiness often turns into anxiety. The complexity of official terminology in the forms and the Income Tax Act can make it all sound a bit too intimidating. But don’t worry; in this article, we’ll help you understand whether you need to file an Income Tax Return and the benefits of filing tax returns. Let’s get into it!

Why should you file Income Tax Returns?

The income tax return (ITR) helps prove that the income you’ve earned in a financial year is legitimate and fully disclosed to the authorities. When you file your income tax returns, you basically share a report that gives the authorities a detailed idea about the income you’ve earned from different sources, the tax liabilities on the income earned, and the TDS deducted on income that is under tax exemption.

There are a lot of specific benefits that you get from filing income tax returns, like:

1. Claim a refund: You can get a refund from the income tax department if you’ve paid more tax than you are required to after accounting for all the tax exemptions.
2. Avoid interest or penalties: Filing your ITRs on time (before the due date) is a good way to avoid any unforeseen penalty or interest liability.
3. It’s valid as a proof of address: ITR can be used as a proof of address for various official documents like passport and Aadhar Card.
4. Evidence of income: Your ITR works as proof of your earnings for a financial year.
5. Insurance: When you’re buying term insurance, the insurance provider will ask for your proof of income to determine your coverage.

Who needs to file ITR and when?

All individuals and businesses need to file income tax returns if their income in a financial year exceeds the basic exemption limit. So, it is important to clearly understand when you’re required to file income tax returns to avoid any penalty or interest liability. Let’s take a look at the different categories of individuals and entities who need to file income tax returns:

Individuals with gross income above ₹ 2.5 lakhs

If you are an individual with a gross income of ₹2.5 lakh or more in a financial year then you must file income tax returns. Please note that the gross income should be calculated after factoring deductions applied under Sections 80C to 80U and Section 10.

Also, if you are a citizen aged between 60-79, then you need to file ITR on earnings above ₹3 lakhs in a financial year. If you are a citizen above 80 years of age, you need to file an ITR for income above ₹5 lakhs in a financial year.

Here are the tax slab rates for financial year 2023-24 under the old regime and the new regime:

For individuals below 60 years of age

For Senior Citizens (60-80 years of age)

For Super Senior Citizens (aged above 80 years) -

Furthermore, if you are an Indian resident who acts as a signing authority for any foreign account, or if you are an Indian resident who possesses an asset or financial interest located outside India, then you need to file your income tax return in India.

Let’s suppose you, as an individual, do not fall into any of the above criteria. You should still file your ITR if you wish to take any kind of loan. ITR filings act as valid income proofs and the loan provider will ask for it.

Businesses

All the registered business entities and companies that are earning from their business need to file income tax returns. The fact that the business has made a profit or loss in the financial year is irrelevant and businesses will need to file income tax returns irrespectively.

Individuals with Long Term Capital Gains above ₹2.5 lakh

Are you an individual who invests in mutual funds, equities, etc? If yes, the income you generate from them will be treated as long-term capital gains. The Income Tax Act places different tax liabilities on the income from various assets under long-term capital gains.

Foreign Company

All the foreign companies that have been taking any treaty benefit on any transaction made in India are liable to file income tax return.

NRIs

It is recommended that all Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), or Overseas Citizens of India (OCIs) should file an income tax return when they have taxable income in India. As per the Income Tax Act 1961, NRIs/PIOs/OCIs have to mandatorily file an ITR in India only if their total annual income in India exceeds:

• ₹2.5 lakh as per the existing tax regime or
• ₹3 lakh as per the new tax regime.

If you are an NRI (Non-Resident Indian) and your total annual gross income earned or accrued in India exceeds ₹2,50,000, then you’re liable to file your income tax return in India.

Did you know? The number of income tax returns filed as of 31-Mar-2023 during FY 2022-23 was 7,78,14,409 and the refund issued as of 31-Mar-2023 during FY 2022-23 was ₹492190,53,22,024.00!

The last date for filing income tax returns for FY 2023-24

Every year, the last date for filing income tax returns is 31st July. If you miss the ITR filing deadline, you have the option to file a belated return before 31st December. So, the ITR filing due date for FY 23-24 is 31st July 2024.

Here are the further details of the due dates for individuals and entities:

Frequently Asked Questions (FAQ)