Yes, it is compulsory to file income tax returns (ITRs). Not filing returns will not only attract penalties but can also hamper your chances of getting a loan, or a visa for travel purposes or property registration. As per the Income Tax Act, below are entities or firms that require mandatory filing of ITRs in India:
- People whose gross total income (before allowing any deductions under section 80C to 80U) exceeds Rs 2.5 lakh in FY 2018-19. This limit is Rs 3 lakh for senior citizens (aged above 60 but less than 80) and Rs 5 lakh for super senior citizens (aged above 80).
- Companies or firms irrespective of whether you have income or loss during the financial year.
- Those who want to claim an income tax refund.
- Those who want to carry forward a loss under a head of income.
- Resident individuals who have an asset or financial interest in an entity located outside of India. This is however not applicable to NRIs or RNORs (Resident but not Ordinary Resident).
- Residents and signing authorities in a foreign account. Again, this is not applicable to NRIs or RNORs.
- Those who derive income from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust.
- Foreign companies taking treaty benefit on a transaction in India.
- Even NRIs, who have income that exceeds Rs. 2.5 lakh (for FY 2018-19) which is earned or accrued in India, are required to file an income tax return in India.
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