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For some, dealing with an income tax return (ITR) can be daunting; for others, it may simply feel boring. However, understanding the basics of ITR is essential. An income tax return is a way of informing the government about how much you have earned in a year and, consequently, how much tax you owe. Think of the ITR as your annual financial report card for the Income Tax Department. Whether your income comes from employment, a business, stock market investments, a side hustle, cryptocurrency, or rental properties, you are required to pay income tax. In this article, we will explain the concept of income tax returns for you. We will discuss what an income tax return filing is, why you need to file one, and how to file an ITR—all in simple language for better understanding.
What is an income tax return or ITR?
An income tax return is a form that taxpayers submit to the tax authority to report their income, expenses, and taxes owed or paid for a financial year. A taxpayer can be an individual, a business, or any other entity specified by the Income Tax Act, such as a Hindu Undivided Family (HUF). Depending on the type of taxpayer, the amount and type of income, and the nature of the entity, there are seven income tax forms—ITR-1 to ITR-7—that taxpayers can choose from.
What is the last date for filing an income tax return in FY 2024-25?
You can file your income tax return for the financial year 2024-25, which runs from April 1, 2024, to March 31, 2025, by July 31, 2025. So, the due date to file an ITR for FY 2024-25 is July 31, 2025, for those who are not liable for audit.
Who needs to file an income tax return for FY 2024-25?
Filing an income tax return is mandatory in India if you fulfil any of the following conditions:
1) If your total income is more than the basic tax exemption limit: Anyone with a total income exceeding the basic tax exemption limit must file an income tax return. The basic exemption limit varies according to the tax regime and the age of the income taxpayers.
For the financial year 2024-25, the basic tax exemption limit is Rs 2.5 lakh for those below 60 years in the old tax regime. For individuals between the ages of 60 and 80, the basic tax exemption limit is Rs 3 lakh. The basic exemption limit for those aged 80 years and above is Rs 5 lakh.
Under the new tax regime, the basic exemption limit is Rs 3 lakh for FY 2024-25.
2) If you have deposited Rs 50 lakh in one or multiple savings accounts during a financial year, you must file an income tax return.
3) If you have deposited Rs 1 crore or more in current account deposits (either in a single account or across multiple accounts) during the financial year, you are obligated to file your ITR.
4) Filing an ITR is mandatory for professionals with an annual income of Rs 10 lakh or more in a financial year.
5) If your electricity bill exceeds Rs 1 lakh in a financial year, you should file an income tax return.
6) You must file an ITR if you have spent more than Rs 2 lakh on foreign travel, whether for yourself or others.
7) If your total tax deducted at source (TDS) or tax collected at source (TCS) liability is Rs 25,000 or more, you are required to file an income tax return. For senior citizens, the TDS limit is set at Rs 50,000 or more.
8) For business turnover exceeding Rs 60 lakh, it is mandatory to file an ITR.
9) You are required to file an income tax return if you earn income from foreign assets or hold signing authority outside India.
Even if your income falls below the basic tax exemption limit, you are required to file your income tax return if you meet any of the above-mentioned conditions.
Should you file income tax return if your income is below the basic tax exemption limit?
Filing an income tax return has multiple benefits, even if your income falls below the basic tax exemption limit.
1) Your income tax return serves as proof of your income for a financial year. When you apply for a loan or insurance, banks or other financial institutions may request your ITR to determine your income.
Freelancers and the self-employed often lack official income statements, so income tax returns are the best way to prove their income.
2) If TDS has been deducted from your income, such as from salary or fixed deposits, you must file your ITR to claim a tax refund. You will not receive your money back if you don’t file an ITR.
3) If you have losses , you can carry them forward to reduce your future tax liability by filing your income tax returns on time.
4) When travelling abroad for work or other purposes, you may need to submit your income tax return to process your visa application.
How to file an income tax return
Typically, taxpayers file their income tax returns online, a process known as e-filing. You can e-file your income tax return through the official Income Tax Department e-filing portal. Several other websites also offer options for filing your income tax return. However, it is advisable to avoid filing your income tax return on your own unless you have the necessary expertise. A small mistake filing your ITR could lead to significant consequences and hefty penalties. Additionally, income tax rules change quite frequently. If you are unaware of the latest regulations, you might miss out on eligible deductions that could reduce your tax liability.
To avoid errors and ensure you don’t overlook any eligible benefits, it is best to seek assistance from an experienced Chartered Accountant who can guide you through the tax filing process.
What happens if you don’t file an ITR by July 31, 2025?
Failing to file your income tax return by the due date of July 31, 2025, can result in significant penalties, interest, and other consequences.
Late-filing fee: If you miss the deadline to file your ITR, a fee of Rs 5,000 is imposed if your income is above Rs 5 lakh. For those with an income above Rs 2.5 lakh but below 5 lakh, the fee will be reduced to Rs 1,000.
Interest charges: Section 234A of the Income Tax Act imposes a 1% monthly interest on unpaid taxes if you file your income tax return after the due date. Filing your ITR on time helps you avoid this extra charge and ensures you stay compliant with tax regulations.
You can’t switch tax regimes: By not filing your ITR on time, you will forfeit the option to choose your preferred tax regime. The new tax regime will be the default tax regime for belated filings or those submitted after July 31, 2025. Taxpayers who file their returns after this deadline cannot switch tax regimes.
Can’t carry forward loss: If you do not file your ITR within the due date, you will not be permitted to carry forward any losses from the current financial year. Filing within the specified deadline is essential to avail of this benefit.
In summary, file your ITR not just to stay compliant but also to enjoy multiple benefits. Not filing your ITR can lead to serious consequences. Consider consulting a Chartered Accountant to help you file your ITR for FY 2024-25.
