In India, the requirement to file income tax returns depends on various factors, including income level, type of income, and the status of the taxpayer. Here are the primary categories of individuals and entities required to file income tax returns:
Individuals:
- Income Above a Threshold: Individuals whose total annual income exceeds the basic exemption limit need to file a return. For the financial year 2023-24, the exemption limit is ₹2.5 lakh for individuals below 60 years of age, ₹3 lakh for senior citizens (60 years or older but below 80 years), and ₹5 lakh for very senior citizens (80 years or older).
- Income from Multiple Sources: Individuals earning income from multiple sources or having income from abroad must file a return.
- Income Subject to TDS: If taxes have been deducted at source (TDS) and you want to claim a refund or verify the TDS details.
- Income Under Presumptive Scheme: Those opting for presumptive taxation schemes under sections like 44AD, 44AE, etc.
- High Net-Worth Individuals: Individuals who hold assets outside India, or those who have income from investments, foreign income, or property must file returns.
- Residents: Indian residents with income exceeding the exemption limit, even if their income is earned outside India, are required to file.
Businesses and Professionals:
- Companies and Firms: All companies and firms, regardless of profit or loss, must file income tax returns.
- Professionals and Business Owners: Individuals or entities engaged in professions or businesses whose gross receipts exceed the prescribed limits must file returns. For example, businesses with gross receipts exceeding ₹2 crore or professionals with gross receipts exceeding ₹50 lakh are required to file.
Others:
- Entities with Tax Benefits: Entities claiming tax benefits or deductions under various sections of the Income Tax Act, such as donations, investments in specified schemes, etc.
- Individuals or Entities with Losses: Those carrying forward losses to the subsequent year for tax benefits must file returns.
It's essential to stay updated with the latest rules and thresholds as they can change with new financial years and budget announcements. If you're unsure about your specific requirements, consulting with a tax advisor can provide clarity tailored to your situation.
