Do You Need To File ITR If Your Income Is Tax-Free?

The ITR filing season for the Financial Year 2024-25 (Assessment Year 2025-26) is here. It’s the time for the taxpayers to gather all documents and file their income tax returns (ITRs) before the due date. The Income Tax Department has extended the deadline to file ITR for FY 2024-25 till Sept. 15, 2025, from July 31 earlier.

This deadline is applicable for taxpayers who don’t need their accounts to be audited. Taxpayers should file their ITRs well in advance to avoid a last-minute rush. Ahead of the ITR filing deadline, many individuals must be wondering if they need to file an ITR even if their income is below the taxable limit.

Even if your income in FY 2024-25 is below the exempted limit, there are specific situations where the law still requires you to file an ITR. Apart from this, filing ITR also helps in several financial and legal matters.

Here are a few circumstances when it’s mandated for all individuals to file an ITR, as per the Income Tax Act, 1961:

• If you are depositing Rs 50 lakh or more in one or more savings accounts, it’s mandatory to file an ITR.

• When the deposits in a financial year in one or more current accounts reach Rs 1 crore or above, it’s mandatory to file the income tax return. However, this is not applicable for businesses.

• If the sales turnover for your business surpasses Rs 60 lakh in a financial year, you are required to file the ITR.  

• It’s also necessary to file the income tax return when you pay Rs 1 lakh towards a single electricity bill, or spend more than Rs 2 lakh on a foreign visit in a financial year.

For FY 2024-25, the basic exemption limit under the old regime is Rs 2.5 lakh for those below 60 years, Rs 3 lakh for senior citizens and Rs 5 lakh for super senior citizens. Under the new tax regime, the exemption limit is Rs 3 lakh for everyone, regardless of age.

So, it is not mandatory to file an ITR if your income falls below the exemption limit, but filing it can help you earn rewards in the long run.

1. Claiming Refunds
Banks deduct TDS (Tax Deducted at Source) on fixed deposits and savings account interest. Employers also deduct TDS for certain payments to salaried employees. So, if your total income is below the taxable limit, you're eligible for a full refund, but only if you file your ITR.

2. Proof Of Income
When you are planning to apply for a home loan, car loan, or credit card, banks and financial institutions look for official proof of income and you may be asked to submit the ITR for the last two to three years.

3. Carrying Forward Of Capital Losses

If you've incurred a short-term capital loss, for example, in stocks, or a business loss, filing ITR allows you to carry forward the loss and set it off against future gains. But if you don’t file the ITR, then you will lose this benefit.

The ITR records could be helpful in several other matters, including legal issues. For example, when you are applying visa for countries like the US, UK, Canada, or Schengen, then embassies may ask for your ITRs of the last 2-3 years. So, filing the ITR not only pertains to mandatory compliance but also paves the way for access to multiple financial instruments in the future.