Tax experts say that even if your annual income is below the exemption limit, you may still need to file your income tax return (ITR) under certain conditions.
The income tax return filing season has started, and over 1.23 crore taxpayers have already filed their returns. This year, the deadline to file ITR is 15 September, and filing early is always beneficial.
Experts advise not to wait until the last minute. What’s important to know is that even if your income is below the taxable limit, you still may have to file a return in certain situations. Not doing so could result in a notice from the Income Tax Department.
What Do the Income Tax Rules Say?
According to the Income Tax rules, if your income is below the exemption limit, you are not required to pay tax.
Under the new tax regime, the exemption limit is Rs 3 lakh per year, while in the old tax regime, it’s Rs 2.5 lakh per year.
However, there are certain cases where filing a return is mandatory even if your income is less than the exemption limit.
If you don’t file in these cases, the Income Tax Department may issue a notice asking why you didn’t file.
Who Must File ITR Even If Income Is Below the Limit?
As per the Income Tax Act, 1961, if any of the following situations apply to you, you must file an income tax return even if your income is below the exemption limit:
Bank deposits exceeding Rs 50 lakh in a financial year
Current account deposits exceeding Rs 1 crore
Annual business turnover over Rs 60 lakh
Professional income over Rs 10 lakh
Electricity bill payment of more than Rs 1 lakh in a year
TDS or TCS deductions of more than Rs 25,000
Ownership of foreign assets or income from abroad
Spending more than Rs 2 lakh on foreign travel
Filing ITR Is Beneficial Even with Low Income
Experts recommend filing ITR even if your income is below the taxable limit. To file a return, you must have a Permanent Account Number (PAN).
Filing ITR helps when you apply for loans, such as home loans or car loans. Banks often ask for your ITR as it is considered a reliable proof of your income.
ITR Can Be Filed Easily Online
The Income Tax Department has simplified the return filing process. If you have a single source of income, such as salary, you can easily file your return using ITR-1 (Sahaj) form. The entire process is online, and you can file from home.
If you are a salaried employee, you’ll need Form 16, which is issued by your employer, to complete your return filing.
