Who is Required to File an Income Tax Return in India?

The Income Tax Act, 1961, is the cornerstone of India’s tax regime, governing how taxes are levied, administered, and collected. With the recent amendments introduced through the Finance Act (No. 2), 2024, understanding who is required to file an Income Tax Return (ITR) for the Assessment Year (AY) 2025-26 (Financial Year 2024-25) is crucial for taxpayers. This blog breaks down the mandatory ITR filing requirements under Section 139 of the Income Tax Act, 1961, highlighting key updates from the Finance Act (No. 2), 2024, to help you stay compliant and avoid penalties.

Understanding the Basics of ITR Filing

Under the Income Tax Act, 1961, filing an ITR is mandatory for certain individuals and entities based on their income, residential status, and specific transactions or conditions. Section 139(1) outlines the primary criteria for mandatory ITR filing, while additional provisions and amendments introduced by the Finance Act (No. 2), 2024, refine these requirements. The Act ensures that taxpayers contribute to India’s progressive tax system, where higher earners bear a greater tax burden, funding essential public services and infrastructure. Let’s dive into who needs to file an ITR and how recent amendments impact these obligations.

Who Must File an Income Tax Return?

According to Section 139(1) of the Income Tax Act, 1961, the following persons are required to file an ITR if their total income (before claiming exemptions or deductions under sections like 10, 80C, etc.) exceeds the maximum amount not chargeable to tax during the previous year (Financial Year 2024-25):

1. Individuals: Any individual (resident or non-resident) whose total income exceeds the basic exemption limit must file an ITR. For AY 2025-26, the basic exemption limits under the new tax regime (default as per Section 115BAC, amended by the Finance Act, 2024) are:
   • ₹3,00,000 for individuals below 60 years.
   • ₹3,00,000 for senior citizens (aged 60 to 79 years).
   • ₹5,00,000 for super senior citizens (aged 80 years and above).
   • Note: The Finance Act, 2024, has made the new tax regime the default for individuals, Hindu Undivided Families (HUFs), Associations of Persons (AOPs, excluding co-operative societies), Bodies of Individuals (BOIs), and Artificial Juridical Persons. Taxpayers can opt for the old regime, which allows deductions under Chapter VI-A and Section 24(b), by exercising this option before the due date of filing (July 31, 2025, for non-audit cases).
2. Hindu Undivided Family (HUF): An HUF must file an ITR if its total income exceeds ₹3,00,000 (new tax regime). HUFs opting for the old regime can claim deductions, such as those under Section 24(b) for interest on housing loans (up to ₹2,00,000 for self-occupied property).
3. Companies: Every company, including domestic companies and those operating in International Financial Services Centres, must file an ITR, irrespective of income or loss, unless specifically exempted.
4. Firms: All partnership firms, including Limited Liability Partnerships (LLPs), are required to file an ITR, regardless of their income level, to report their financials.
5. AOPs, BOIs, and Artificial Juridical Persons: These entities must file an ITR if their income exceeds ₹3,00,000 (new tax regime). The Finance Act, 2024, confirms the new tax regime as the default for these entities, with an option to switch to the old regime for non-business cases.
6. Trusts and Non-Profit Organizations: Trusts or institutions registered under Section 12A/12AA/12AB or approved under Section 10(23C) must file an ITR if their total income exceeds ₹5,00,000, they receive foreign contributions, or they apply income outside India. The Finance Act, 2024, extended the deadline for filing audit reports (Form 10B/10BB) for AY 2023-24 to March 31, 2024, for cases where the wrong form was filed, ensuring compliance flexibility.

Additional Conditions Triggering Mandatory ITR Filing

Beyond income thresholds, certain conditions mandate ITR filing, even if income is below the exemption limit, as per Section 139(1) and Notification No. 37/2022. These conditions, unchanged by the Finance Act, 2024, include:

• High-Value Transactions:
  • Depositing more than ₹1 crore in one or more current accounts in a financial year.
  • Depositing more than ₹50 lakh in one or more savings bank accounts.
  • Spending more than ₹2 lakh on foreign travel for yourself or another person.
  • Incurring electricity bills exceeding ₹1 lakh in a financial year.
• Business or Professional Income:
  • Businesses with gross receipts exceeding ₹60 lakh (or ₹75 lakh if cash receipts are less than 5% of total receipts under Section 44AD).
  • Professionals with gross receipts exceeding ₹15 lakh (or ₹25 lakh if cash receipts are less than 5% under Section 44ADA).
• TDS/TCS Claims: If tax has been deducted or collected at source (TDS/TCS) and the individual wishes to claim a refund, filing an ITR is mandatory, even if income is below the exemption limit.
• Loss Carry Forward: Individuals, HUFs, or businesses wishing to carry forward losses (e.g., business loss, capital loss) must file an ITR to preserve the right to offset future income.
• Non-Residents: Non-residents must file an ITR if they have income taxable in India (e.g., from property, business, or capital gains), subject to residential status under Section 6. For Indian citizens or persons of Indian origin visiting India, the 60-day stay requirement is extended to 182 days.

Due Dates for ITR Filing (AY 2025-26)

The Finance Act, 2024, does not alter the ITR filing deadlines, which remain:

• July 31, 2025: For individuals, HUFs, and entities not requiring an audit and without international/specified domestic transactions.
• October 31, 2025: For taxpayers requiring an audit under Section 44AB or those with transfer pricing reports.
• November 30, 2025: For businesses with international/specified domestic transactions.
• December 31, 2025: For filing belated or revised returns.

Why Compliance Matters

Filing an ITR is not just a legal obligation but also a way to claim refunds, carry forward losses, and maintain financial transparency. Non-compliance can lead to penalties under Section 234F (up to ₹5,000 for late filing) and scrutiny by the Income Tax Department. The Finance Act, 2024, emphasizes digitization, with provisions recognizing electronic records and e-filing enhancements, making compliance easier through the Income Tax Department’s portal.

Conclusion

The Income Tax Act, 1961, as amended by the Finance Act (No. 2), 2024, clarifies and simplifies ITR filing requirements for AY 2025-26. Individuals, HUFs, companies, firms, and other entities must file ITRs if their income exceeds the basic exemption limit or they meet specific conditions like high-value transactions or TDS claims. The shift to the new tax regime, increased deductions, and changes in capital gains taxation are significant updates that taxpayers must consider. Stay informed, plan your finances, and file your ITR on time to ensure compliance and maximize tax benefits.

For detailed guidance, refer to the Income Tax Act, 1961, and notifications on the official Income Tax Department website (www.incometax.gov.in). If you need personalized assistance, consult a tax professional to navigate the complexities of the new tax landscape.

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