Many taxpayers believe they do not need an Income Tax Return because their yearly income stays below the tax exemption limit. However, the Income Tax Act lists specific situations where filing ITR becomes legally compulsory.
This rule applies even when your total income does not create any tax liability. For FY 2025-26, the basic exemption limit under the old tax system stands at ₹2.5 lakh.
Meanwhile, the new tax system has a basic exemption limit of ₹4 lakh. Therefore, certain financial activities can make ITR filing necessary.
10 Situations Where Filing ITR Becomes Compulsory
1. Electricity Bill Above ₹1 Lakh
If you pay electricity bills worth ₹1 lakh or more during a financial year, you must file your ITR.
2. Foreign Travel Expenses Above ₹2 Lakh
People spending ₹2 lakh or more on foreign travel for themselves or family members need to submit ITR.
3. Savings Account Deposits Above ₹50 Lakh
If total deposits in one or multiple savings accounts reach ₹50 lakh or more in a financial year, ITR filing becomes mandatory.
4. Current Account Deposits Above ₹1 Crore
Anyone depositing ₹1 crore or more across one or multiple current accounts must file an income tax return.
5. TDS or TCS Above ₹25,000
If your salary, fixed deposit, or other transactions involve TDS or TCS deductions of ₹25,000 or more yearly, ITR filing becomes necessary.
For senior citizens, this limit stands at ₹50,000.
6. Income Crossing Basic Exemption Limit
Taxpayers earning above the applicable exemption limit must file ITR. For FY 2025-26, the old regime limit remains ₹2.5 lakh.
The new regime provides a ₹4 lakh basic exemption limit.
7. Business or Capital Loss Carry Forward
If you face losses from shares, cryptocurrency purchases, or property sales, filing ITR becomes necessary.
This allows taxpayers to carry forward losses for adjustment against future profits.
8. Assets Outside India
Indian residents owning foreign assets, shares, or bank accounts must file ITR.
9. Professional Income Above ₹10 Lakh
Freelancers, doctors, lawyers, IT professionals, and consultants with professional gross receipts above ₹10 lakh must file returns.
10. Business Turnover Above ₹60 Lakh
Business owners with yearly turnover above ₹60 lakh need to file ITR. This requirement applies even without any profit.
Financial Activities Can Trigger Filing Requirements
Therefore, taxpayers should not consider income alone while deciding their ITR requirement. Certain transactions and financial activities can make filing legally necessary.
