Filing of Income Tax Return (ITR) is one of the most important compliance requirements done by a taxpayer whether being a salaried person or in the field of business or profession. Many taxpayers believe that ITR filing is required only when the taxable income exceeds the basic exemption limit, but this is not totally true. In several cases, taxpayers may be required to file an ITR even when the income is below the basic exemption limit, due to an obligation arising due to ownership of foreign assets, business activity, carried forward of losses etc.
As the filing season for the Assessment Year 2026-27 begins, taxpayers should be aware of the mandatory filing provisions and the situations where ITR is to be filed.
In this article, we shall delve into the situations where the taxpayer is obliged to mandatorily file ITR:
1. When Total Income Exceeds the Basic Exemption Limit
The most common requirement for filing ITR is that if the taxpayers Total Income before claiming deductions, if any exceeds the basic exemption limit. The basic exemption limits varies based on following the tax regime. The same is described as:
| Particulars | Exemption Limit as per Old Tax Regime | Exemption Limit as per New Tax Regime |
| Individuals below 60 years | Rs. 2,50,000 | Rs. 4,00,000 |
| Individuals above 60 years but below 80 years | Rs. 3,00,000 | |
| Individuals above 80 years | Rs. 5,00,000 |
2. When company or partnership firm, including LLP exists, regardless of profit or loss.
Every company/partnership firm including LLP registered in India must mandatorily file ITR, regardless of whether they have made a profit or incurred a loss or has not conducted any activity during the year.
3. When a resident owns foreign assets or has financial interests abroad
If an individual, a resident in India owns any asset located outside India or is a beneficiary of any foreign asset, trust, property or a signing authority in a foreign bank account, such an individual is mandatorily required to file ITR even if there is no taxable income from the assets obtained or any interest outside India.
4. When a person incurs Foreign Travel Expenditure exceeding Rs. 2 lakhs
An individual who incurs expenditure of Rs.2 lakh or more on foreign travel for himself or for another person during the financial year, then such an individual has to mandatorily file an ITR.
5. When a person Deposits in Current account or a Cooperative Bank an amount exceeding Rs. 1Crore
Where the aggregate deposits in one or more current accounts maintained with a banking company or a Cooperative Bank by an individual exceed Rs. 1 crore in a financial year, such individual is required to mandatorily furnish an ITR.
6. When a person Deposits in Savings account an amount exceeding Rs. 50 lakhs
Where the aggregate deposits in one or more savings bank accounts by an individual is Rs. 50 lakhs or more in a financial year, such individual is required to mandatorily furnish an ITR.
7. When a person incurs electricity Consumption of an amount exceeding Rs. 1 Lakh
Where the electricity expenditure of an individual exceeds Rs. 1 lakh during a financial year, such individual is required to mandatorily furnish an ITR.
8. When a Person has Income from Business or Profession exceeding the specified limits
If the total sales, turnover or gross receipts, as the case may be, in the business exceeds Rs. 60 Lakhs during the previous year or if total gross receipts in profession exceeds Rs. 10 Lakhs during the previous year, such a person is mandatorily required to file an ITR.
9. When TDS/TCS exceeds the specified limits
If the total Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) of a person is more than Rs.25,000, ITR filing is mandatory. However, this threshold is Rs.50,000 for senior citizens (aged 60 years or more).
10. When a taxpayer wants to claim a refund of excess tax paid.
ITR filing is mandatory in cases where a taxpayer is eligible to claim a refund of taxes. If excess tax has been deducted or paid during the financial year such as through TDS, TCS, or advance tax and the taxpayer wishes to recover the excess amount, filing an ITR is required to process and obtain the refund.
11. When a taxpayer wishes to carry forward certain losses to future year
If an individual or entity incurs losses under eligible heads of income such as business income, capital gains, or house property, filing ITR within the prescribed due date is necessary in order to enjoy the benefit of carry forward of losses. Failure to file the return on time may result in the loss of this benefit.
At a glance: When ITR Filing becomes Mandatory
| Situation | Threshold |
| Total Income before deductions | Above the Basic Exemption Limit |
| Company or Partnership Firm incl LLP | Any Amount |
| Resident Owns Foreign Assets or have Financial Interest | Any Amount |
| Foreign Travel Expenditure | Exceeding Rs. 2 Lakhs |
| Deposits in Current Account or Cooperative Bank | Exceeding Rs. 1 Crore |
| Deposits in Savings Account | 50 Lakhs or more |
| Electricity Expenditure | Exceeding Rs. 1 Lakh |
| Person having Income from Business | Exceeding Rs. 60 Lakhs |
| Person having Income from Profession | Exceeding Rs. 10 Lakhs |
| TDS/TCS during the year | Rs. 25,000 (Rs. 50,000 for senior citizens) |
| Refund of Taxes Paid | Any Amount |
| Carry Forward of Losses | Any Amount |
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For any further information or clarification, the author can be reached at cashubhikhandelwal@gmail.com
Disclaimer: This document is intended for knowledge sharing purpose only. The information contained in this article is published for the knowledge of the recipient but is not to be relied upon as authoritative or taken in substitution for the exercise of judgment by any recipient. Whilst due care has been taken in the preparation of this article and information contained herein, the author will not be responsible for any errors that may have crept in inadvertently and do not accept any liability whatsoever, for any direct or consequential loss howsoever arising from any use of this article or its contents or otherwise arising in connection herewith.
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