Why you may need to file ITR even if your income is below the exemption limit

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Filing can be compulsory even below exemption levels

Even if your annual income falls below the basic exemption threshold—₹2.5 lakh under the old tax regime and ₹3 lakh under the new one—it isn’t always safe to skip filing an Income Tax Return (ITR). Under Section 139(1) of the Income-tax Act, 1961, filing is mandatory if you’ve engaged in any of eight specified financial transactions during the year.

Foreign travel and overseas income trigger filing

If you’ve spent ₹2 lakh or more on foreign travel—whether for yourself or someone else—that alone triggers a requirement to file your return. The same goes for holding any foreign assets, earning foreign income, or having signing authority over an overseas account. These are significant thresholds that Indian taxpayers cannot overlook.

TDS, TCS and high-value deposits come under the scanner

If overall TDS (tax deducted at source) or TCS (tax collected at source) for a year is ₹25,000 or more (or ₹50,000 for senior citizens), that also requires ITR filing regardless of your income. High-value bank transactions are also in the spotlight. Consolidated deposits of ₹50 lakh in savings accounts or ₹1 crore in current accounts during the financial year also require filing.

Business turnover and electricity bills also feature on the list

Businessmen and professionals also have their limits; a business turnover of more than ₹60 lakh, or professional receipts of more than ₹10 lakh, mandates the taxpayer to file an ITR. Even total electricity bill payments of ₹1 lakh or more during the year forces you to file, displaying how consumption habits can push one to file taxes.

Penalties for not meeting a mandated filing

If filing is mandatory and you miss the deadline, there may be a late fee of ₹1,000 on condition that your taxable income should not exceed ₹5 lakh.

FAQs

Q: Am I required to file an ITR if my income is below ₹3 lakh but I have incurred some investment or deductions?

A: Not unless you are in one of the eight mandated categories of transactions or other mandatory considerations like foreign assets or TDS/TCS thresholds. Even so, if you are not required to file, filing a "nil return" can assist in building your financial integrity—useful for loans, visas, and refund tracking.

Q: If I just hit the TDS/electricity bill threshold—do I need to file?

A: Yes. Electrical bills of either ₹1 lakh or TDS/TCS of ₹25,000 (₹50,000 for senior citizens) requires ITR, regardless of whether your income is exempt.