Who Should File ITR: Income Tax Return? A Complete Guide

Do you want to understand what is ITR: Income Tax Return, and who is eligible to file ITR in India? Here is a complete guide to help you!

Do you want to understand what is ITR: Income Tax Return, and who is eligible to file ITR in India? Here is a complete guide to help you!

What is ITR: Income Tax Return?

It is the duty and responsibility of every citizen of India to file income tax returns. Irrespective of whether salaried or self-employed, everyone needs to file ITR.

The government uses the ITR to assess your income, check whether you have complied with the rules and regulations, and determine if you owe any refund. A lot of people need clarification on whether they require ITR filing or not.

Here in this article, you can understand who all are required to file income tax returns.

Who should go for ITR: Income Tax Return?

Any citizen with income above Rs. 2.5 lakh per annum has to file ITR as per the Indian Government law. However, this limit is different for senior citizens. Below is the list of people required to do ITR filing in India.

People with taxable Income

All individuals who earn and fall into the taxable income threshold should go for ITR tax filing. The slabs differ according to the age of the taxpayer, and below are the same for your reference:

  1. People below 60 years – Rs. 2.5 lakhs
  2. Senior citizens between 60 and 80 years – Rs. 3 lakhs
  3. Senior Citizens above 80 years – Rs. 5 lakhs

Businesses

All the companies and business firms that have earned an income in the last financial year will need to file for ITR. It does not matter whether they made a profit or loss; ITR filing is mandatory.

Partnership Firms

All partnership firms in India, including LLPs (Limited Liability Partnerships), must file income tax returns. These firms must file a return showing their income, liability, and deductions.

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NRIs – Non-Indian Residents

Irrespective of the amount of income, if an NRI has any income source in India, they will need to file for ITR. The income can be from any of the mentioned sources below:

  • Property
  • Capital Gains
  • Salary
  • Business
  • Profession
  • Other taxable sources in the country

The only exception for the NRIs is if their total income is less than the threshold and the income source is interest or dividend income; under special conditions, they may not be required to file ITR.

Indian Residents with Foreign Income

Indian residents with any kind of income from a foreign country are liable for ITR filing. These foreign assets could be property, bank accounts, or financial investments.

There is no income threshold for foreign income, and irrespective of whatever amount is made, people need to do income tax return filing. If someone misses filing the ITR, penalties can be attached.

Trust and Charitable Institutes

As per the Indian Income Tax Act, 1961, all trust and charitable institutions registered and exceeding the minimum required threshold must file their ITR.

Political Parties and Other Associations

It is a myth that political parties are not required to file ITR. In fact, every political party and other association, such as research centers and trade unions, must file for ITR if they exceed the minimum required threshold.

Mandatory Filing

There are many individuals with exempt income or who make income from charitable trusts; elected representatives and public servants must also file for ITR.

These people are supposed to go for ITR filing even if their income is below the minimum threshold. The government has thus made it a mandate to ensure transparency in their financial records.

LTCG returns

Most income earned from Long term capital gains (LTCG), such as sales of equity mutual funds, sale of business units, or sale of equities, comes under the exempt income.

But if your total income earned from LTCG during any financial year exceeds Rs. 2.5 lakhs, you will need to file ITR.

Bottom Line

ITR filing is not an option but a mandate for people. More than just filing, it is also important to file the ITR before the due date. Hence, it is essential for people to know whether they fall in the ITR filing category and also when is the ITR filing last date.

Knowing this information will assist them in completing their process on time and avoid penalties.

Image source: Charliepix free and edited on CanvaPro

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