An income tax return (ITR) is a document used to report information related to your earnings and taxes to the Income Tax Department. A taxpayer’s tax liability gets computed using their income. If the return reveals that too much tax got paid during the year, the individual will be eligible for a refund from the Income Tax Department.

Every year, a person or company who makes money during a fiscal year has to file an income tax return as per the law. The income could be in the form of a salary, business profits, rental income, dividends, capital gains, interest, or other forms of earnings.

Individuals and businesses must file tax returns by a specific deadline. If a taxpayer misses the deadline, they will get charged with a penalty.

Is it mandatory to file Income Tax Return?

If your income exceeds the basic exemption limit, you must file your income tax returns according to Indian tax legislation. Taxpayers’ income tax rate is predetermined. A delay in filing returns will not only result in late filing costs, but it will get harder to obtain a loan or a visa for travel.

Who is required to file a tax return?

According to the Income Tax Act, Individuals and corporations who fall into certain income bands should pay income tax. The entities or enterprises listed below are required to file ITRs in India regularly:

1. All individuals, up to the age of 59, who have a total income of more than Rs 2.5 lakh in a financial year The maximum increases to Rs. 3 lakh for senior persons (aged 60-79) and Rs. 5 lakh for super senior citizens (aged 80 and above). It’s worth noting that the income amount should get determined before taking into account the deductions available under Sections 80C to 80U, as well as additional exemptions available under Section 10.
2. All registered businesses that generate revenue, whether or not they have earned a profit throughout the year.
3. Those who desire to receive a refund for any excess tax deducted or income tax paid.
4. Individuals with financial interests or assets in companies based outside India.
5. Treaty benefited foreign businesses that conduct business in India.
6. In a single financial year, NRIs who earn or accrue more than Rs. 2.5 lakh in India.