Many taxpayers assume they do not need to file an if their income is below the exemption limit. While filing may not be mandatory, doing so can offer several financial and practical benefits.
What is the basic exemption limit?
The income tax exemption threshold depends which tax regime a taxpayer picks:
New tax regime
- Income up to ₹4 lakh is tax-free.
- Earnings between ₹4 lakh and ₹8 lakh are taxed at 5%, with tax rates increasing gradually for higher income brackets.
- The highest rate of 30% applies to income exceeding ₹24 lakh.
Old tax regime
- The basic exemption limit is ₹2.5 lakh.
- Income from ₹2.5 lakh to ₹5 lakh is taxed at 5%,
- Income between ₹5 lakh and ₹10 lakh attracts a 20% tax rate,
- Income above ₹10 lakh is taxed at 30%.
Do you need to file an ITR even if your income is below the exemption limit?
It is not mandatory for individuals whose taxable income is below the exemption limit to file ITR, as per the income tax rules. There is no legal obligation. However, taxpayers often submit income tax returns despite having income below the exemption limit.
Why it can be helpful?
- Filing a Nil ITR creates an official record of your income.
- Income Tax Return acknowledgements are often required when applying for visas, loans, credit cards, and various other financial products and services.
- Filing a Nil ITR can also help taxpayers claim refunds. In certain cases, tax may have been deducted at source (TDS) even though the individual’s taxable income ultimately falls below the exemption limit after considering eligible deductions and exemptions.
- Submitting an ITR is essential to recover such excess tax deducted.
Deadlines for filing ITR for FY 2025-26
Here are the deadlines by which taxpayers must file their income tax returns based on their income type:
- Individuals (Non-audit cases): Salaried, pensioners and investors must file ITR-1 or ITR-2 by 31 July 2026, unless extended by the I-T department.
- Business/Profession (Non-audit cases) – All freelancers and small businesses must file ITR-3 or ITR-4 by 31 August 2026.
- Tax audit cases: Business owners or professionals requiring audit must file ITR-3 or ITR-4 by 31 October 2026.
- Belated Return (Late filing): All ITR forms must be filed by 31 December 2026 if you failed to file your tax return on time.
The Income Tax department has notified all income tax return forms for the assessment year (AY) 2026-27. While ITR forms 1-4, filed by small and medium taxpayers, were notified on March 30, ITR forms 2, 3, 5, 6 and 7, as well as ITR-U (for filing updated returns), were notified on March 31.