Why it is mandatory file Income Tax Return even if your taxable income is below tax limit?

POSTED BY Jagoinvestor ON July 2, 2009 COMMENTS (13)

Filing Income Tax Return  is an important thing and as the date for filing ITR is approaching you should have a clear idea about how to file ITR. But is it mandatory to file Income Tax Return?

A lot of people are confused about this simple question of when to file your tax return, In this short article lets see what are the conditions under which you need to file your tax return.

Filing Income Tax Return is mandatory

Who should file Income Tax Return?

As per Indian Income Tax Act 139(1), it is mandatory to file Income Tax Return, for every individual who’s income exceeds the exemption level.

People say that if you don’t have to pay tax , you don’t have to file returns which is not true totally. Lets see the simple rules.

Rule : You have to file your tax returns if your Total Income for the year exceeds the exemptions limit. That’s it !! This is the only rule which applies.

Exemption limit can be different for male (1.5 lacs), female (1.8 lacs) or senior citizen (2.25 lacs). So if your Total income for the year exceeds your exemption limit, you have to file tax.

Do you know how to calculate your tax?

Should I file Income Tax Return even if I don’t have to pay any tax?

Didn’t you read what is said above :-). The only rule is already mentioned above. You don’t have to pay tax. This can happen in two cases.

Case 1 : Income itself is below exemption limit

In this case you don’t pay tax and don’t file your Returns.

Case 2 : Your Income exceeds, but not taxable income

Though your Income exceeds, but After all the exemptions and deductions like 80C investments, HRA, Home loan interest exemption etc etc, your taxable income is below your exemption limit. In this case you don’t have to pay tax, BUT !! you have to file tax returns because your income (not taxable income) was above the exemption limit.

What are the other cases when I have to file the returns?

There are other cases also when its more than paying tax. lets see those cases

  • If you have some form of losses carried forward in subsequent years to write off against profits in future, in that case its obvious, that you will have to file a return so that you can give this information.
  • If Govt itself gives you notice to file tax return, it may happen that you are cheating this nation and making black money , then tax department can ask you for details and you will have to file tax return.
  • If you want a Tax refund because of TDS (Tax deducted at Source by your company). This happens with people who do part time jobs for some months or with Interns in the company who are there for 3 months or 6 months and TDS is cut. So in order to get back the amount you have to file a tax return.

Watch the video given below to know why it is necessary to file ITR:

Why is it necessary to file Income Tax Return?

There are some reasons why should file income tax return, which may look simple but they have a major impact on your financial life. Lets see what are those reasons:

  1. If you are planning to take loan in future, the lender may ask the proof of your ITR filing.
  2. The ITR filing proof is also essential to get VISA if you want to travel abroad.
  3. It is also important if you want to claim the adjustment against past losses.
  4. ITR report is provided by Income Tax departments, so if you file Income Tax  Return regularly on time, it will make your future transactions easier without any complications.
  5. In some states, you can not but an immovable property if you don’t have the Income Tax Return filing proof.

Besides all these reasons, filing Income Tax Return on time makes you a responsible citizen.

13 replies on this article “Why it is mandatory file Income Tax Return even if your taxable income is below tax limit?”

  1. Chetan Ambi says:

    I think it’s always good to file the returns. Btw nice article !!

    1. Yes.. filing returns have a lot of benefits like home loan or later when you are asked for scrutiny !

  2. Sripad says:

    What is so awesome about terror attacks? You should remove that message and the link – its in bad taste.

    1. Sripad

      By “Awesome” I mean the way they have shown what all happened so beautifully . You dont come to know about things in so detail , so it was an appreciation for people who created it . It was not about the event and what happened , It was unfortunate !


  3. Pingback: Income Tax « Resources
  4. Kalyan Ghose says:

    No further comment.

  5. Kalyan Ghose says:

    I am a senior citizen. I own a self occupied house. My income is only from fixed deposit interest,equity dividends and total under the exemption limit. If I do not submit return now but some time later earn interest that takes me past the exemption limit can I resume tax return?
    I realise I may have to pay C.G tax if I sell some share under the DTcode; when is it getting activated? what will be the first year of assessment under this Direct Tax code?

    1. Kalyan Ghose says:

      This is not clear to me if you need other detail. I understand DTC is coming into effect from April 2011. If I earn capital gain from selling more than 1-year old share during year April 2010-March 2011 do I have to pay CG tax under DTC?

    2. Kalyan

      Only if your taxable income before the exemptions is above the limit , then you file the tax.

      DTC is not yet sure to come , if its passed by parliament only then it will come into effect and it looks not that easy to me , the first assessment year would be 2012 , means it will be applied on mar 2011- mar 2012 income .


  6. Manish Chauhan says:


    Yes .. you have a good reason for filing the return .. nice


  7. Karan Batra (CharteredClub) says:

    yeah you dont need to file your returns if your Taxable Income is less than the limits which attracts tax..

    But it is always good to file … Advantages being that Loans can easily be procured as the return acts as a solid proof of Income

  8. Manish Chauhan says:


    oops .. i dont know that . You need to find out that from some other source .

    Also , share it with us 🙂 . One thing i suspect is that its too late to claim 🙁


  9. Ninja says:

    Can you tell me what form I need to use to file returns for refund of TDS deducted during my internship. My internship was from July-Dec 2006 and I found out that the tax deducted from the stipend then can be refunded, only recently. Is is too late to claim a refund now ?

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

FREE Financial Health Checkup

Take up a detailed 25 questions financial health checkup to find out how much you score out of 100?