As the ITR filing season for AY 2026-27 begins, taxpayers should check if they fall under mandatory filing categories. While income below ₹4 lakh (new regime) or ₹2.5 lakh (old regime) is generally exempt, certain high-value financial activities trigger mandatory filing. Understanding these rules is vital to avoid penalties and ensure access to benefits like tax refunds and loan documentation.
What Happened
The income tax return (ITR) filing season for the Assessment Year (AY) 2026-27 has commenced. Many taxpayers are determining whether they are legally required to file a return. While there are basic income thresholds for exemption, the Income Tax Department mandates filing for specific individuals based on their income levels, financial transactions, and asset ownership. Understanding these criteria is essential to avoid unwanted penalties and ensure compliance.
Basic Exemption Limits
For most individuals, the need to file a tax return depends on their total annual income. If your income is within the basic exemption limits, you may not be required to file. For the current assessment year, individuals opting for the new tax regime with a total income below ₹4 lakh are generally not required to file a return. Under the old tax regime, this threshold is ₹2.5 lakh. If your income exceeds these levels, filing an ITR becomes mandatory.
Who Is Exempt From Filing
Beyond basic income limits, certain categories of taxpayers are exempt from filing returns, provided they meet specific criteria:
- Individuals whose income is entirely tax-exempt under the Income-tax Act.
- Minor children whose income is combined with a parent’s income.
- Specific Non-Resident Indians (NRIs) whose only income in India comes from foreign exchange assets or long-term capital gains, provided Tax Deducted at Source (TDS) has been correctly processed.
- Non-resident sportspersons, entertainers, or sports associations whose income is specific and has already had TDS deducted.
This exemption for non-residents does not apply if they have other taxable income in India or if they are looking to claim a tax refund.
Mandatory Triggers For Filing
Even if your income is below the taxable threshold, you must file a tax return if you undertake certain high-value financial transactions. These are often used by the tax department to track spending and financial activity. You are required to file if you meet any of the following conditions:
- You spent over ₹2 lakh on foreign travel for yourself or anyone else.
- Your annual electricity bill exceeded ₹1 lakh.
- Your total sales or turnover from a business exceeded ₹60 lakh, or gross receipts from a profession exceeded ₹10 lakh.
- You deposited more than ₹1 crore in one or more current bank accounts.
- You deposited over ₹50 lakh in one or more savings bank accounts.
- Your TDS or TCS (Tax Collected at Source) for the year exceeded ₹25,000 (or ₹50,000 for senior citizens).
- You held any foreign assets during the financial year.
Why Investors Should File Voluntarily
Even if you are not legally required to file, experts often suggest doing so. A filed tax return acts as official proof of income, which is frequently requested by banks for home, car, or personal loans, and by embassies for visa applications.
Furthermore, if you are an investor, filing a return is the only way to carry forward losses from the stock market or business to future years, which can help offset future gains. It is also the only way to claim a refund if excess tax was deducted from your salary, dividends, or interest income. Assuming you are exempt when you are not can lead to interest on unpaid taxes and financial penalties.