ITR Filing: You may have to file ITR even if your income is less than Rs 7 lakh. It depends on whether you are using the old tax regime or the new tax regime. Accordingly, you can avail tax exemption under section 87A.
ITR Filing: It’s time to file Income Tax Return (ITR). Many employed people, especially those who have just started working, are confused about their tax liabilities. The most common question is whether it is necessary to file ITR if your annual income is less than Rs 7 lakh? Let’s know the answer to this question here. Also, let’s understand why filing ITR can be necessary even if you have a low income.
Ankit Jain, partner, Ved Jain & Associates, explains that all companies and firms are required to file their tax returns. Individuals are required to file their tax returns if their total income before deductions is more than Rs 2.5 lakh. However, this does not mean that you have to pay income tax. There is a provision for tax rebate under Section 87A of the Income Tax Act, 1961.
You are eligible for this rebate if your taxable income does not exceed Rs 5 lakh under the old tax regime or Rs 7 lakh under the new tax regime. For senior citizens (60+ age), this limit is Rs 3 lakh and for super senior citizens (80+ age), this limit is Rs 5 lakh.
ITR will have to be filed in these situations also
Apart from this, if a person has deposited Rs 50 lakh or more in his savings account or his business is more than Rs 60 lakh or his professional income is more than Rs 10 lakh, then he will also have to file his tax return.
Jain says that if a person’s TDS is more than Rs 25,000, then he will also have to file his tax return. Even if the above conditions are not met, if someone wants to claim a refund, he will have to file a tax return. No refund will be processed without filing a tax return.
Under the old tax regime, you can get a maximum tax rebate of up to Rs 12,500. In the new tax regime, the maximum rebate is Rs 25,000. So, if your income is within these limits, you will not have to pay any income tax.
However, you must file ITR even if your tax liability is zero. You must file ITR if your total income exceeds the basic exemption limit before deductions under Chapter VI (such as Section 80C, 80D, etc.). The basic exemption limits under the old tax regime are as follows:
- Individuals below 60 years of age: Rs 2.5 lakh
- Individuals above 60 years but below 80 years of age: Rs 3 lakh
- Individuals above 80 years of age: Rs 5 lakh
Understand the new tax regime
Under the new tax regime, the basic exemption limit for the financial year 2023-24 (assessment year 2024-25) is Rs 3 lakh. This arrangement is the default. If a taxpayer does not file his ITR and does not opt for the old tax regime by submitting Form 10-IEA, then his income tax will be calculated under the new tax regime by default. This means that they may miss out on deductions that could have been claimed under the old regime.
It is important to file ITR even if your income is less than Rs 7 lakh and tax liability is zero. This is because the filing requirement is based on your gross income before deductions and not filing could cause you to miss out on potential deductions or exemptions. Make sure which tax regime applies to you and file your ITR accordingly to avoid any problems with the tax authorities.
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