Is ITR Filing Mandatory for Everyone? Know the Legal Criteria

When we talk about Income Tax Return (ITR) filing in India, most people assume it’s only necessary for high earners. But that’s not entirely true. While income level is a major deciding factor, there are several other circumstances where filing an ITR becomes mandatory—even if your income is below the taxable limit. Let’s understand the key situations under the Indian Income Tax Act when filing an ITR is not optional but a legal obligation.

Who is Required to File an ITR in India?

Contrary to popular belief, not every Indian citizen needs to file an Income Tax Return. However, you must file an ITR if you fall under any of the following categories:

1. Income Above the Basic Exemption Limit

If your total income exceeds the basic exemption limit set by the Income Tax Department, you are required to file an ITR.

• Below 60 years of age: ₹2.5 lakh

• Senior citizens (60–80 years): ₹3 lakh

• Super senior citizens (80+ years): ₹5 lakh

Even if your income is just ₹1 above the exemption limit, you need to file your return.

2. Tax Residency and Foreign Assets

According to Section 6 of the Income Tax Act, 1961, an individual is considered a tax resident if they are present in India for 182 days or more in a financial year.

If you’re a tax resident and any of the following applies, ITR filing is mandatory—even if your income is below the taxable limit:

• You own any asset outside India (property, shares, etc.)

• You have signing authority in a foreign bank account

• You are a beneficiary of any foreign asset or entity

3. Deposits Over ₹1 Crore in Current Accounts

If you have deposited more than ₹1 crore in aggregate in one or more current accounts during the financial year, you must file an ITR. This rule applies regardless of your income level.

4. Foreign Travel Expenses Above ₹2 Lakh

Spent more than ₹2 lakh on foreign travel in a financial year? You’re required to file an ITR—even if your income doesn’t cross the taxable limit. This helps the government track high-spending individuals.

5. Electricity Bills Over ₹1 Lakh

If you spend ₹1 lakh or more on electricity bills in a year, ITR filing becomes mandatory. This is another way the tax department assesses spending patterns that may indicate taxable income.

6. High Business Turnover or Professional Receipts

Running a business or working as a freelancer? You must file an ITR if:

• Your business turnover exceeds ₹60 lakh

• Your professional receipts exceed ₹10 lakh

Even if your net income is within the tax-free slab, crossing these turnover limits triggers the need to file.

7. High TDS or TCS

If the total TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) in a financial year is:

• ₹25,000 or more for general taxpayers

• ₹50,000 or more for resident senior citizens then filing an ITR is compulsory. This helps match taxes already paid with your actual income.

8. Savings Account Deposits Over ₹50 Lakh

If the aggregate amount deposited in one or more savings bank accounts exceeds ₹50 lakh, you’re required to file an ITR. This ensures transparency in large financial holdings and transactions.

Conclusion

While ITR filing is not mandatory for every Indian citizen, it becomes compulsory once you meet any of the above income or transaction-based criteria. Staying compliant with tax laws helps avoid penalties, ensures smooth financial documentation, and strengthens your financial profile.

So, even if you think your income is too low to be taxed, it’s wise to review your financial activities for the year. If you fall into any of these categories, don’t skip filing your return.

Frequently Asked Questions (FAQs)

Q1. Is ITR filing mandatory for students or housewives?

ITR is not mandatory unless their income or financial transactions fall under the prescribed criteria (e.g., deposits, foreign travel, etc.).

Q2. What happens if I don’t file ITR when required?

You may face penalties, interest on tax dues, and even legal consequences under the Income Tax Act.

Q3. Can I file ITR even if it’s not mandatory for me?

Yes. In fact, it’s recommended as it helps in visa processing, loan applications, and creates a valid income record.

Q4. Do NRIs need to file ITR in India?

NRIs are required to file ITR in India if they have income accrued or received in India above the exemption limit or fall under any specific category requiring mandatory filing.

Q5. What is the due date for filing ITR?

For most individual taxpayers, the deadline is 31st July of the assessment year unless extended by the government.