Who are required to file income tax returns compulsorily

Many people inquire if filing ITRs is at all necessary, especially, if their income does not exceed the exemption limit. However, the Income Tax Act lays down guidelines specifying conditions when filing the ITR is imperative. In this regard Section 139 of the Income Tax Act, 1961 prescribed the persons and situations wherein such persons are required to file income tax returns compulsorily,

Persons who are required to file income tax returns compulsorily

1. Company / firm

A Company / firm is required to file income tax returns compulsorily irrespective of the quantum of its income or loss. (Section 139(1)(a)).

2. Person whose income exceeds the amount of exemption limit

i) Persons (other than an individual/HUF/AOP/BOI/artificial juridical person/company/firm) are required to submit income tax return , if income exceeds exemption limit which is Rs 2,50,000 for AY 2023-24 and 2024-25. (Section 139(1)(b))

ii) Individual/HUF/AOP/BOI/artificial juridical person is required to submit his / its income tax return , if income ( without claiming deductions under section 10A, 10B, 10BA, 80C to 80U, and capital gain deductions under section 54/54B/ 54D/ 54EC/ 54F/ 54G / 54GA / 54GB) exceeds the amount of exemption limit. (Section 139(1)(b) read with sixth proviso).

The exemption limits are given below:

• ₹2.5 lakh for individuals with age less than 60 years, HUF, AOP, BOI or an artificial juridical person.
• ₹3 lakh for resident senior citizens (aged 60 years or more but less than 80 years)
• ₹5 lakh for resident super senior citizens (aged 80 years or more)

3. Person possessing assets located outside of India

Filing a return of income is mandatory for individuals in the following situations:

• If they hold any asset, including any financial interest in any entity, located outside India, whether as a beneficiary or in any other capacity.
• If they have signing authority in any account situated outside India.
• If they are a beneficiary of any asset, including any financial interest in any entity, located outside India. (Section 139(1), read with fourth proviso)

4. Person (other than Company / firm) making deposit exceeding ₹1 crore into a bank account

Taxpayers are required to file their income tax returns if they have deposited ₹1 crore or more in one or multiple current accounts held with a bank / co-operative bank in the previous year. (Section 139(1)(b) read with seventh proviso).

5. Person (other than Company / firm) spending amount exceeding ₹2 lakh on overseas travel

If such taxpayers have accumulated expenses exceeding ₹2 lakh for himself (or any other person) for travel to a foreign country, they are required to file their tax returns for that year.(Section 139(1)(b) read with seventh proviso).

6. Person (other than Company / firm) spending amount exceeding ₹1 lakh towards electricity

If taxpayers have spent over ₹1 lakh on electricity consumption in any year, they must file their tax returns for that financial year.(Section 139(1)(b) read with seventh proviso).

7. Person (other than Company / firm) if the turnover of business / profession exceeds a limit.

If the total sales, turnover, or gross receipts of a business / profession exceed ₹60 lakh / ₹10 lakh respectively, in any year, taxpayers are required to file their returns for that financial year.(Section 139(1)(b) read with seventh proviso).

8. Person (other than Company / firm) if total amount of TDS and TCS exceeds a limit.

If taxpayers have an aggregate amount of tax deducted at source (TDS) and tax collected at source (TCS) equal to or exceeding ₹25,000 during any year (₹50,000 or more for in case of senior citizen) , they are required to file their ITRs for that financial year. (Section 139(1)(b) read with seventh proviso).

9. Person (other than Company / firm) if the deposit in a savings bank account is equal to or exceeds ₹50 lakh

If the total deposit in one or more savings bank accounts by a taxpayer amounts to ₹50 lakh or more during any year, such person is required to file an ITR for that financial year. (Section 139(1)(b) read with seventh proviso).

Also Read: Income Tax Returns: Types of forms , which form for whom and Due Dates

10. Trust

A person in receipt of income derived from property held under trust for charitable or religious purposes is required to submit return of income if its income (without giving exemption under section 11 or 12) exceeds exemption limit viz Rs 2,50,000 for AY 2023-24 and 2024-25. (Section 139(4A))

11. Political party

CEO of every political party is required to submit ITR if income of the political party (without giving exemption under section 13A) exceeds exemption limit viz Rs 2,50,000 for AY 2023-24 and 2024-25. (Section 139(4B)).

12. Specified persons eligible for exemptions whose income exceeds exemption limit

If total income ( without claiming any exemption given below) of the following assessee (who is qualified to claim exemption under the following sections) exceeds the exemption limit:

1. Research Association referred to in section 10(21);
2. News Agency referred to in section 10(22B);
3. Association Or Institution referred to in section 10(23A);
4. Institution referred to in section 10(238);
5. Fund Or Institution referred to in sub-clause (iv) or Trust Or Institution referred to in sub-clause (v) or any University or Other Educational institution referred to in sub-clause (vi) or any Hospital or Other Medical Institution referred to section 10(23C) in sub-clause(via);
   1. Mutual Fund referred to in clause (23D) of section 10;
   2. Securitisation Trust referred to in clause (23DA) of section 10;
   3. Venture Capital Company or Venture Capital Fund referred to in clause (23FB) of section 10;
6. Trade Union Association referred to in sub-clause (a) or (b) of section 10(24).
7. Body Or Authority Or Board Or Trust Or Commission (by whatever name called) referred to in clause (46) of section 10;
8. Infrastructure Debt Fund referred to in clause (47) of section 10 (Section 139(4C))

13. University / college / other institution

Any university / college / other institution referred to in Section 35(1)(ii)/(iii) is required to submit ITR irrespective of income or loss and even if not required by any other provision. (Section 139 (4D))

14. Business trust / investment fund

Business Trusts / Investment Funds are mandatorily required to file their ITRs as per Section 139(4E) / (4F).

For text of Section 139 CLICK HERE

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Frah Saeed

Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.