It is easy to confuse income tax jargon. The terminology in annual budget announcements and a lot of income-tax related articles and forums tends to be convoluted and nobody can be blamed for being misled into getting the incorrect picture.

The short answer is No, you do need to file ITR for income less than 2.5LPA (lakhs per annum). Indeed, the bright side of being in this income tax bracket is that you do not need to compulsorily file ITR or pay any taxes at least.

However, as per annual budget 2019, if an individual who during the previous year—

(i) has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current accounts maintained with a banking company or a co-operative bank; or
(ii) has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or
(iii) has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or than will required to file ITR.

Further, you may need to file ITR (income tax returns) if you need to claim a refund or carry forward losses. Also, for a lot of our favourite travel destinations, ITR for the past three to five years are often part of the documents checklist. As a result, while you do not have to, it is advisable for you to do so anyway. It’s like working out. Nobody has to work out, unless you make a living off your appearance (like actors) or if your daily bread relies on your fitness (like sports people) but most people do today anyway, because it is the healthier alternative.

What do you mean by I need to file ITR for income less than Rs 2.5L but pay no tax?

You need to file what is called a nil income tax return. You get proof of your income for Visa applications in the future, not to mention that this comes in handy even when you want to apply for loans or any other type of credit. Similarly if you have paid TDS despite your income being below the taxable limit you need to file ITR to claim a refund. What if you have incurred a loss in your day trading or mutual fund investments? This too can be claimed if you file an ITR. So long as your overall income is less than Rs 2.5LPA you simply file a nil ITR and pay no tax and if you during the previous year—(i) has deposited an amount or aggregate of the amounts exceeding 1 crore rupees in one or more current accounts maintained with a banking company or a co-operative bank; or (ii) has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or (iii) has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or than will required to file ITR.

Calculate your Income tax AY 2021-22

#ITRforUnder2.5Lakh #ITRFiling #CanaraHSBCOBCLifeInsurance

Timestamp:

00:00 – Introduction
00:28 – Filing ITR if your annual income is less than Rs. 2.5 Lakhs
00:42 – Tax exemption limit for FY 2020-21
01:01 – What is total income?
01:16 – When is it mandatory to file ITR?
01:55 – Reasons to file ITR

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