Who Should File Income Tax Return?

It is mandatory to file an income tax return if your annual income is higher than Rs. 2.5 lakh per annum. For senior citizens who are more than 60 years old and less than 80 years old, the limit is Rs. 3 lakhs. For senior citizens who are more than 80 years old, the limit is Rs. 5 lakhs. An income tax return is the information stating the income and losses of an assessee as per the format stipulated by the income tax department.

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The income tax return should be filed before the due date. It can be filed online or offline, as per your convenience.

Filing of income tax returns 

Indian citizens and individuals who are earning an income and come under the Indian government’s tax jurisdiction mandatorily must pay income tax. Income tax returns should be filed as per Section 139 (1) of the Income Tax Act.

Individuals/entities who fall under the following criteria must file income tax returns.

  • Gross income more than Rs. 2.5 lakhs - The gross annual income of an individual should exceed Rs. 2.5 lakh after applying deductions under various Sections of the Income Tax Act.
  • Businesses - Companies and firms who have earned an income, regardless of profits or losses during the last financial year
  • For tax refund - Individual who would like to get a refund from the income tax department
  • Carry forward loss - To carry forward a loss under a particular head of income, filing return is necessary
  • LTCG returns more than Rs. 2.5 lakh - You have earned income which is exempt from LTCG (Long Term Capital Gains) such as the sale of equities, sales of equity mutual funds or sale of a business unit. If you have earned more than Rs. 2.5 lakh, you should file the returns. Effective FY 2016-17, FY 2017-18, you should file tax returns even if the money earned under LTCG is exempt from capital gains.
  • Business interest in another country - Resident Indian with an asset or business interest in a foreign country should file income tax returns (not applicable for NRIs)
  • Signing authority - If you are a resident Indian and are the signing authority of a foreign account (other than NRIs), you should file income tax returns.
  • Income held by trust – If you receive income held by a trust or religious institution, educational institution, research organization, trade union or non-profit organization
  • Foreign company – A foreign company getting benefits from a treaty with India should file income tax returns for all the transactions
  • To apply for a loan – You should file income tax return to apply for a bank loan


The income earned in India by an NRI, is taxable in India.

Filing returns online 

It is very important to e filing income tax in the following cases:

  • To claim a refund from the income tax department
  • Required to file ITR-3, ITR-4, ITR-4S, ITR-5, ITR-6 and ITR-7
  • The taxable income is more than Rs. 5 lakh

Penalty for not filing income tax returns

Until FY 2016-17

The assessing officer may levy a penalty of Rs. 5000 if you have not filed the return under Section 271F.

After FY 2017-18

A penalty of Rs. 5000 if the return for FY 2017-18 is filed after the due date (31st July, 2018), but before 31st December, 2018

Penalty of Rs. 10000 if the return for FY 2017-18 is filed after 31st December, 2018, but before 31st March, 2019.

The penalty is limited to Rs. 1000 if the total annual income is less than Rs. 5 lakh.

Section 234F

It is a new Section introduced by the government in the Income Tax Act. As per the new section, an individual should pay Rs. 10,000 for filing income tax returns after the due date, as specified in Section 139 (1) of the Income Tax Act. The penalty will be applicable from the assessment year 2018-19.

As per the current Section 271F, a penalty will be imposed, as per the sole discretion of the assessing officer, if an individual fails to submit the return before the end of the financial year. The Section 271F will not be applicable for AY 2018-19 and thereafter. Section 271F is applicable for returns filed for AY 2017-18 and before.

Section 234A

If an assessee has not paid the tax before the due date, a simple interest of 1% per month will be levied by the Income Tax Department.

Benefits of filing income tax returns

You will be doing your civic duty citizen of India by paying income tax. Filing income tax on a regular basis, allows you to easily apply for a home loan or a personal loan. The banks and financial institutions offer loans based on your income tax returns. ITR is an established proof of your income and it is a valid document for approaching various financial institutions.

In some cases, you will want to provide ITR while applying for a visa. It is especially important to straighten out your finances before visiting another country or emigrating. If there is a pending procedure or any discrepancy with the Income Tax Department, you may not get the visa.

Some credit card companies will insist upon an ITR before granting a credit card.

Salaried employees will be able to take a loan from banks and other financial institutions by filing their income tax returns regularly.

TDS (Tax Deduction at Source)

TDS is a means of collecting of income tax in India. If an individual person payments of a particular type, a certain percentage of the money should be paid to the Income Tax Department and the remaining amount will be paid to the receiver.

The TDS percentage will be fixed by the Income Tax Department, as per the nature of service or payment. For example, the TDS on professional fee is 10%. If TDS was deducted, the deductor should give a certificate to the receiver.

Two types of TDS certificates are prominent.

Form 16 – The details of tax deducted by an employer throughout the financial year will be provided through Form 16. It is applicable for the salaried class only. Employers will deduct TDS based on the income slab of the employee.

Form 16A – Form 16A is applicable to all classes other than salaried employees.

The TDS should be collected before the due date and should be credited to the Income Tax Department by the employer.

Form 26AS

It is a consolidated annual tax credit statement and it can be accessed from the Income Tax Department’s website. If you have paid your taxes, this information will be readily available to the Income Tax Department. The tax proceeds credited by the employer, bank and various establishments will reflect in the Form 26AS.

Details of high-value transactions, advance tax and other transactions can be found in Form 26AS. You can access Form 26AS from the income tax portal. It can be accessed through the net banking facility provided authorized banks. The Form 26AS can be downloaded in PDF, text and HTML form as per your needs.

Verification of tax details 

Before you file income tax return, the taxpayer should verify the details of Form 26AS. If there is any discrepancy, it should be informed to the Income Tax Department. The Income Tax Department will make rectifications in the document. If you have received tax refunds in the previous financial year, it will reflect in Form 26AS of the relevant financial year. 

The details present in Form 26AS should match with Form 16 or Form 16A. If there is a mismatch, you will face difficulty in filing your tax returns. If you claim for a refund, it should be in tune with Form 26AS.

Different categories of income tax returns 

There are different categories of income tax returns.


Salaried individuals and pensioners can use ITR-1 to submit tax returns if their annual income is less than 50 lakhs. If income is earned from only one house or other sources (other than lottery), which does not need to be carried forward to the next year, one can use ITR-1.


If any income is earned from salary/pension, more than one house, capital gains, from foreign assets or foreign income, as a partner in a firm or agricultural income of less than Rs 5000, ITR-2 will be applicable.


Business owners, professionals and others who have income from the proprietary business should file ITR-3. It can be filed by HUF as well.


ITR-4 can be filed by any businessman who have opted for a presumptive income scheme. It can be filed by a wholesaler, retailer, doctor, freelancer, insurance agent and any other professional. If the business turnover exceeds Rs 2 crore, the individual must file ITR-3. 


Indian citizens and Non-Resident Indians who earn money in India should file their income tax returns well before the due date. You should file your income tax return even if your income does not qualify to come under the purview of income tax. If the tax return is not filed before the due date, a penalty will be levied by the assessing officer. If you have incurred any past losses, they can be adjusted with the help of income tax returns. If you file your returns before the deadline, you will be able to revise the return without any issues.

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^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
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