Income Tax: Who Needs to File ITR for AY 2024-25 and What Happens If You Don't?

Filing income tax returns (ITR) is an annual obligation for many Indian taxpayers. Understanding whether you need to file an ITR for the assessment year (AY) 2024-25 (or financial year 2023-24) can help ensure compliance with the income tax rules. Here’s a comprehensive guide to determine if you are required to file an ITR this year.

Income Thresholds

The primary criterion for filing an ITR is based on your income level. For AY 2024-25, the income thresholds are as follows:

Individuals below 60 years: Total income exceeding Rs 2.5 lakh.

Senior citizens (60-80 years): Total income exceeding Rs 3 lakh.

Super senior citizens (above 80 years): Total income exceeding Rs 5 lakh.

“If your total income before deductions under Sections 80C to 80U surpasses these limits, you must file an ITR,” said a tax practitioner.

How to File ITR Online for FY24, A Step-by-Step Guide

Types of Income

Beyond the basic income thresholds, the need to file an ITR extends to various types of income. It means the following incomes will be considered as your income throughout the year:

Salaried Individuals: Income from salary exceeding the specified threshold.

Income from House Property: Rent or other income from house property.

Capital Gains: Earnings from the sale of property, stocks, mutual funds, etc.

Business or Profession: Income from business or professional activities.

Other Sources: Income from interest, dividends, winnings from lotteries, etc.

Specified Conditions

Even if your income is below the threshold, certain conditions necessitate filing an ITR:

Deposits in Bank Accounts: For current accounts, deposits exceeding Rs 1 crore in one or more bank accounts. For saving accounts, deposits of Rs 50 lakh or more.

Foreign Travel Expenses: Expenditure over Rs 2 lakh on foreign travel.

Electricity Bills: Payments exceeding Rs 1 lakh on electricity bills.

Additionally, if you have foreign assets or income, or hold signing authority in any account outside India, you must file an ITR regardless of your income level.

Investment Gains and Losses

Investors in stocks, mutual funds, or other securities need to file an ITR if:

Capital Gains: You earned short-term or long-term capital gains.

Dividends: You received dividends, even if tax-free up to Rs 10 lakh.

Reporting investment losses is also crucial as it allows you to carry forward losses to offset future gains, reducing your tax liability in subsequent years.

Claiming Refunds

If you have paid excess tax through Tax Deducted at Source (TDS) or advance tax, filing an ITR is necessary to claim a refund. Without filing, you cannot reclaim the excess tax paid.

Mandatory Filers

Certain categories of individuals and entities are mandatorily required to file an ITR, regardless of income level:

Companies and Firms: All companies and firms, irrespective of income or loss.

Charitable Trusts and Religious Institutions: If they are claiming exemption under Section 10.

What Happens If You Do Not File ITR?

Failing to file an ITR can lead to penalties and prosecution:

Late Filing Fees: A penalty of Rs 5,000 if filed after the due date but before December 31 of the assessment year. If filed later, the penalty increases.

Interest on Tax Due: Interest on the amount due, calculated monthly from the due date.

Prosecution: In severe cases, non-compliance can lead to prosecution, with imprisonment ranging from three months to two years, and a fine.