A To Z of Filing Your Income Tax Return

Think again. Not filing could cost you.
Here's who must file, who should, and why it matters.
What's more, the deadline to file your ITR has been extended till September 15, 2025

Many believe income tax returns (ITRs) are only meant for salaried individuals or business owners. But in reality, filing may be legally required -- or surprisingly beneficial -- even for freelancers, retirees, students, or homemakers.

Filing your income tax return in India raises two essential questions: Do you need to file at all, and if so, which form should you use? Ignoring either can lead to penalties, delayed refunds, or missed financial opportunities.

Beginning today and through the week, we unpack the ten most-asked and most-searched ITR questions -- made crystal clear. Whether you're salaried, self-employed, retired, or a business owner, this five-part series lays out a clean, confident path to ITR filing.

In this first part, we explain who is legally required to file, who should voluntarily file -- and why it makes sense to do so even when it's not mandatory.

For the Financial Year 2024-2025 (Assessment Year 2025-2026), remember: the deadline for non-audit taxpayers has been extended to September 15, 2025 from July 31, 2025.

Let's begin by asking the most important question: Do you really need to file an ITR this year?

Who Really Needs to File an ITR in India?

For many people, income tax return (ITR) filing feels like a technical, tedious government chore meant only for the wealthy. But filing an ITR is sometimes legally required -- and often beneficial even when it isn't.

Here's how to know if you must file, why you may want to file anyway, and how it can affect your finances.

When Is Filing ITR Mandatory?

Legally, you have to file an ITR if in a financial year, if:

• Your total income before deductions ('gross total income') exceeds Rs 2.5 lakh for most individuals (Rs 3 lakh for senior citizens, Rs 5 lakh for those above 80 years).
• You hold any asset (including bank account) outside India or are a signing authority for any foreign account.
• You want to claim a refund for excess Tax Deducted at Source (TDS) or advance tax paid.
• You have earned from or invested in foreign companies (even if below the income threshold).
• Deposited amount exceeds Rs 1 crore in one or more current accounts, spent Rs 2 lakh or more on foreign travel, or Rs 1 lakh or more on electricity bills in a year.
• You received income as a non-resident (NRI), or your Indian income exceeds Rs 2.5 lakh in a year.

Who Should Voluntarily File ITR?

You can and should file even if not legally required, in cases where:

• You need income proof for a loan, credit card, visa, or certain legal processes.
• You want to claim a tax refund, such as on fixed deposit interest or multiple jobs.
• Filing shows financial discipline and can speed up your financial applications.
• Being able to show past ITRs can be vital for startups/business registrations.

Benefits of Filing Even If Not Required:

• Serves as documented income proof for banks, embassies, or government agencies.
• Maintains a record with the tax department -- good for future queries and compliance.
• Helps in getting high-value policies (insurance, investments) where documented income is needed.
• Timely, voluntary filing avoids late fees or problems if your income rises unexpectedly.

Who is Exempted?

• Those earning solely from agriculture (an amount below Rs 5,000). However, if agricultural income exceeds Rs 5,000 and your non-agricultural income crosses the basic exemption limit, filing is mandatory.
• Certain tax-exempt pensions, like disability pensions for armed forces personnel, may not require filing.
• Persons below the basic exemption threshold, with no qualifying financial activity for mandatory filing.

Consequences of Non-Filing:

• Penalties: You could be charged a late fee or fine (up to Rs 5,000).
• Trouble with refunds: No return means no tax refund, even if owed.
• Ineligible for some government benefits or schemes.
• Deductions/discrepancies may go unchecked, causing unwanted future tax demands.

Bottom Line:

Whether you are a salaried professional, freelancer, student, or retiree, don't ignore ITR -- even if you think you don't need it.

Filing keeps your finances clean, compliant, and ready for opportunities.

Which ITR Form Should You Use?

Choosing the correct ITR form is the first hurdle. The tax department provides multiple forms for different kinds of taxpayers and incomes. Selecting the wrong form can lead to rejection or unwanted scrutiny.

The Main ITR Forms

Form	Who Should File	Key Features
ITR-1	Salaried, pensioners, interest only	Gross income up to Rs 50 lakh, 1 house, no business
ITR-2	Individuals, HUFs with capital gains	Capital gains, >1 property, NRIs, no business
ITR-3	Business owners, professionals	Income from business, profession, partnerships
ITR-4	Presumptive taxpayers (easy scheme)	Business income up to Rs 50 lakh, simple return

How to Choose:

1. Know Your Income Sources:

• Salary/pension only: Start with ITR-1.
• More than one property, capital gains, or foreign income: ITR-2.
• If you run a business, freelance, or are a partner in a firm: ITR-3.
• If you opted for simple presumptive taxation under Sections 44AD/44ADA/44AE: ITR-4.

2. Non-Resident?

Most NRIs use ITR-2 or ITR-3 depending on other income types.

3. Any Special Cases?

• Income as a partner in a firm: ITR-3.
• Agricultural income over Rs 5,000: ITR-2 or ITR-3.
• Directors of companies with unlisted shares: ITR-2 or ITR-3.

Common Pitfalls:

• Choosing ITR-1 with multiple properties or capital gains: This is incorrect; upgrade to ITR-2.
• Business income declared on ITR-1 or ITR-2: Only ITR-3/4 allows business income.
• Presumptive scheme confusion: Use ITR-4 only if eligible (check eligibility for Sections 44AD/44ADA).

Instructions and Help:

• Each form comes with a government-issued 'instructions booklet.' Read the guide on the tax portal.
• If still unsure, reliable online services or a chartered accountant can help clarify.

Why It Matters:

• Wrong form = return becomes 'defective' -- fixing this can be time-consuming.
• May delay your refund or flag your case for audit.
• Choosing the right form ensures quick, smooth processing.

Make sure that you match your income streams and activities to the list above. When in doubt, it's safer to pick a more comprehensive form (ITR-2/3).

Using the correct ITR form is the simplest way to avoid government notices and make your tax filing stress-free.

Now that you know whether income tax return filing is a must for your situation -- and which form matches your income sources and activities, the next step is about gathering the right documents for a smooth, mistake-free filing experience.

• Part 2: ITR Filing -- Your Essential Document Checklist
• Part 3: Step-By-Step ITR E-Filing, Choosing Right Tax Regime
• Part 4: Tax Filing: Mistakes To Avoid 
• Part 5: HELP! Multiple Form 16s And Filing ITR