Think you’re exempt from filing your Income Tax Return (ITR) because your income is below ₹2.5 lakh? Think again.
While most people associate tax returns with high earners, the Income Tax Act has several lesser-known rules that make ITR filing mandatory—even if you fall below the basic exemption limit. From big-ticket transactions to foreign travel and TDS deductions, your income isn’t the only factor the government looks at anymore.
Skipping ITR when it’s legally required can cost you more than just penalties—you could miss out on refunds, delay your loan or visa applications, and risk being flagged by the tax department’s growing digital surveillance.
In this guide, we break down the key scenarios where ITR filing is compulsory in FY 2024–25 (AY 2025–26)—even with low or no income—and why filing voluntarily can still be a smart financial move.
Who Is Normally Exempt From Filing ITR?
As per the Income Tax Act, individuals under 60 years of age are not required to file an ITR if their gross total income is below ₹2.5 lakh. For senior citizens (60+), this limit is ₹3 lakh, and for super senior citizens (80+), it’s ₹5 lakh.
However, these basic exemption limits are subject to several conditions. You may still need to file an ITR due to other factors—regardless of your income level.
When Filing ITR Is Mandatory—Even If Income Is Below ₹2.5 Lakh
Let’s look at key situations where ITR filing becomes mandatory despite your low income:
1. Deposits Over ₹1 Crore in a Bank Account
If you have deposited ₹1 crore or more in one or more current accounts in a financial year, ITR filing is compulsory, even if your income is below ₹2.5 lakh. This rule is aimed at tracing high-value transactions.
2. Foreign Travel Expenses Exceeding ₹2 Lakh
Spent ₹2 lakh or more on foreign travel for yourself or someone else in FY 2024–25? You’re required to file an ITR, regardless of income. This includes personal trips, corporate travel paid by you, or even bookings for family members.
3. Electricity Bills Over ₹1 Lakh
Paid electricity bills totaling ₹1 lakh or more in the financial year? The Income Tax Department mandates return filing under Rule 12AB to keep tabs on high-spending individuals.
4. Owns Assets Outside India or Holds Foreign Income
If you own foreign assets, hold foreign bank accounts, or earn income outside India, you must file ITR—even if your Indian income is below ₹2.5 lakh.
This applies especially to:
1. NRIs with Indian income,
2. Residents with property or investments abroad,
3. Freelancers with foreign clients.
For more on NRI tax rules, check out our blog on NRI Tax Filing Guide 2025.
5. TDS/TCS Deducted During the Year
If Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) has been deducted from any income—like FD interest, freelance payments, or rent—you must file an ITR to claim a refund, even if your total income is below ₹2.5 lakh.
Example:
You earned ₹1.8 lakh from freelance projects, but clients deducted ₹18,000 as TDS. To recover that ₹18,000, you need to file an ITR.
6. Carrying Forward Losses
Even if you incurred capital losses (say, from stocks or crypto) or business losses, filing ITR is essential to carry them forward for future set-off. If you skip it, you lose that tax-saving opportunity forever.
7. You Are a Director in a Company
Being a director in any Indian or foreign company—even a dormant one—means mandatory ITR filing, irrespective of income level.
8. You Have Investments in Unlisted Equity Shares
If you hold unlisted shares in startups, private companies, or early-stage ventures, you need to report these in your ITR—even if you made no income from them.
9. You Are a Business Owner or Professional (Section 44ADA/44AD)
Under the presumptive taxation schemes (like Section 44AD or 44ADA), filing ITR is mandatory if your gross receipts exceed ₹2 crore (business) or ₹50 lakh (profession), even if your profits are low or nil.
Planning to start a business? Visit our Startup Services page to explore Proprietorship, LLP, and Private Limited Company registration options.
Benefits of Filing ITR Voluntarily
Even when it’s not mandatory, filing your ITR voluntarily offers several benefits:
✔ Claim Tax Refunds
If excess TDS has been deducted, you must file a return to get it back.
✔ Build Financial Credibility
ITRs are often required for:
1. Home loans
2. Personal loans
3. Visa applications
4. Credit card approvals
Lenders and embassies may ask for past 2–3 years’ ITRs to assess financial discipline.
✔ Carry Forward Losses
If you want to carry forward any business or capital loss for future offsetting, ITR filing is a must.
✔ Avoid Scrutiny
Filing returns ensures transparency and reduces the chances of receiving notices under Sections 142(1) or 148.
Key Deadlines for FY 2024–25 (AY 2025–26)
1. Individual ITR due date (non-audit cases): 31st July 2025
2. Belated or revised return: 31st December 2025
3. Audit cases (business/profession): 31st October 2025
Need help with deadlines? Check our Annual Compliance Calendar 2025 for Private Limited Companies for more key tax dates.
Final Thoughts
While the ₹2.5 lakh exemption limit still stands, today’s tax system is no longer just about income—it’s about financial footprints. The Income Tax Department, through tools like AIS, TIS, and Form 26AS, can now track everything from high-value transactions to overseas travel. So even if your income is technically “non-taxable,” your activities may still trigger mandatory ITR filing requirements.
Whether you’re a salaried professional, freelancer, homemaker, senior citizen, or investor, filing your ITR isn’t just about following the law—it’s about building your financial credibility, protecting your future claims, and staying fully compliant in a digitally monitored world.
At PGA & Co. (PGACA), we help individuals like you decode tax rules and file accurate returns with 100% compliance—no guesswork, no missed deadlines.
Need expert guidance? Book a tax consultation with us today and file your ITR with confidence.