Summary: For FY 2025–26 (AY 2026–27), the requirement to file an Income-tax Return (ITR) continues to be governed by the Income-tax Act, 1961, as the Income-tax Act, 2025 becomes effective only from 1 April 2026 for AY 2027–28 onwards. An ITR reports income, tax liability, taxes paid, and refund claims while fulfilling a statutory compliance obligation. Under Section 139(1), individuals must file an ITR if their total income exceeds the applicable basic exemption limit, depending on the chosen tax regime. Filing is also mandatory for persons below the exemption limit if they undertake specified high-value transactions, including current account deposits above ₹1 crore, foreign travel expenditure exceeding ₹2 lakh, electricity consumption above ₹1 lakh, specified TDS/TCS, or savings bank deposits of ₹50 lakh or more. Companies, partnership firms, LLPs, and certain residents holding foreign assets or financial interests must also file ITRs. Timely filing helps claim refunds, carry forward eligible losses, and avoid interest, late fees, and other consequences.
1. What is an Income-tax Return (ITR)?
An Income-tax Return (ITR) is a statement filed with the Income-tax Department in which a taxpayer reports:
- Income earned during the financial year;
- Tax payable on such income;
- Taxes already paid through TDS, advance tax or self-assessment tax; and
- Claim of refund, if any.
Filing an ITR is not merely a means of paying tax. It is also a legal compliance requirement under the Income-tax Act, 1961.
2. Which law applies for FY 2025–26?
Although the Income-tax Act, 2025 has been enacted, it comes into force from 1 April 2026 and applies from Assessment Year (AY) 2027–28 onwards.
Accordingly, income earned during FY 2025–26 (AY 2026–27) continues to be governed by the Income-tax Act, 1961.
3. Who is required to file an ITR?
The requirement is contained in Section 139(1) of the Income-tax Act, 1961.
Broadly, every person must file an ITR if any of the following conditions are satisfied.
A. Total income exceeds the basic exemption limit
Every individual whose total income before claiming deductions under Chapter VI-A (such as sections 80C, 80D, 80CCD etc.) exceeds the applicable basic exemption limit is required to file an ITR. It also depends on tax regime selected.
All the incomes are included while determining whether the income exceeds the basic exemption limit or not. For example :
- Salary Income
- Business Income
- Professional Income
- Rental Income
- Interest Income
- Capital Gains
- Pension
- Income from Other Sources
B. Mandatory filing even if income is below the exemption limit
Many people believe that if their income is below the taxable limit, they never need to file an ITR. This is incorrect.
The seventh proviso to Section 139(1) requires certain persons to file an ITR even if their income is below the exemption limit.
The requirement applies if during the financial year any of the following occurs:
1. Current account deposits
Aggregate deposits exceeding ₹1 crore in one or more current accounts with a bank.
2. Foreign travel expenditure
Expenditure exceeding ₹2 lakh on travel to a foreign country for yourself or any other person.
3. Electricity expenditure
Electricity consumption exceeding ₹1 lakh during the financial year.
4. Other prescribed conditions
The Government has prescribed additional situations through Rule 12AB of the Income-tax Rules, 1962.
These include persons who have, during the financial year:
- TDS/TCS of ₹25,000 or more
- (₹50,000 for senior citizens);
- Aggregate deposits of ₹50 lakh or more in one or more savings bank accounts.
If any of these conditions are satisfied, filing of ITR becomes mandatory even though the person may not have taxable income.
C. Companies and Firms
Every company is required to file an ITR irrespective of whether it has earned profit or incurred loss.
Similarly, every partnership firm and LLP is required to file an ITR irrespective of its income.
D. Persons having foreign assets
A resident (other than a Resident but Not Ordinarily Resident) is generally required to furnish an ITR if he or she:
- owns any asset outside India;
- has signing authority in any foreign bank account;
- holds any financial interest in any foreign entity.
Appropriate disclosures are also required in the prescribed return form.
4. Why should a person file an ITR even if not legally required?
Even where filing is not compulsory, filing an ITR is beneficial because it:
- enables claim of income-tax refund;
- serves as proof of income;
- facilitates loan and visa applications;
- establishes financial credibility;
- enables carry forward of eligible losses (subject to the Act);
- assists in future tax assessments and financial transactions.
5. Due dates for filing ITR (AY 2026–27)
The statutory due date depends upon the category of taxpayer.
Generally:
- Individuals and HUFs not liable to tax audit – 31 July 2026
- Certain business/profession cases not requiring audit (where applicable under notified provisions) – 31 August 2026
- Persons liable to tax audit – 31 October 2026
- Cases involving transfer pricing report – 30 November 2026
The Central Government may extend these dates by notification.
6. Consequences of not filing the ITR
Failure to file an ITR where required may result in:
- liability to interest for delay;
- late filing fee under section 234F;
- inability to carry forward certain losses;
- delay or denial of tax refunds;
- scrutiny or notices from the Income-tax Department;
- prosecution in specified cases involving wilful default.
7. Frequently Asked Questions (FAQs)
Q1. My income is below the taxable limit. Do I still need to file an ITR?
Possibly yes. If you satisfy any of the prescribed conditions under the seventh proviso to section 139(1) or Rule 12AB (such as high-value current account deposits, foreign travel expenditure, electricity expenditure, prescribed TDS/TCS, or large savings bank deposits), filing an ITR is mandatory.
Q2. I only have salary income and TDS has already been deducted. Do I still need to file?
Yes, if your total income exceeds the applicable exemption limit or if you satisfy any other condition requiring filing.
Q3. Is filing an ITR the same as paying tax?
No. Filing an ITR is a statutory compliance requirement. Tax may or may not be payable depending upon your taxable income and taxes already deducted or paid.
Q4. Can I claim a refund without filing an ITR?
No. Refund of excess tax deducted or paid can ordinarily be claimed only by filing the prescribed Income-tax Return.
Conclusion
Filing an Income-tax Return is a statutory obligation for persons covered under Section 139(1) of the Income-tax Act, 1961. While the most common reason for filing is that income exceeds the basic exemption limit, the law also mandates filing for certain persons undertaking specified high-value financial transactions or satisfying prescribed conditions, even where no tax is payable. Timely filing not only ensures compliance with the law but also enables taxpayers to claim refunds, carry forward eligible losses, and maintain a reliable financial record.
Author Bio
