Who Must File ITR for FY 2025-26 (AY 2026-27)? A Complete Guide

Filing your Income Tax Return (ITR) early is more than just a legal box to check; it is a strategic financial move to maximize tax savings and avoid the last-minute rush. For the Financial Year (FY) 2025-26 and Assessment Year (AY) 2026-27, the Income Tax Department has defined specific categories of taxpayers who must mandatorily file their returns to remain compliant. Whether your income is above or below the threshold, understanding the updated criteria ensures you avoid heavy penalties. Here is a breakdown of exactly who must file an ITR this year and why early compliance is key.

Sneha Das

7/9/20264 min read

1. Understanding the Basic Exemption Limits

The primary criterion for mandatory ITR filing is whether your total income (before applying deductions like 80C, 80D, etc.) crosses the Basic Exemption Limit. This threshold varies significantly depending on whether you choose the New Tax Regime or the Old Tax Regime.

New Tax Regime (Default)

Following recent budget reforms, the basic exemption limit under the New Tax Regime has been raised to ₹4,00,000 for all individuals, regardless of age.

While the basic exemption limit to file a return is ₹4 lakh, resident individuals earning up to ₹12 lakh will owe zero tax due to the enhanced Section 87A rebate of ₹60,000. For salaried individuals, this effective zero-tax threshold rises to ₹12.75 lakh after factoring in the standard deduction of ₹75,000.

Old Tax Regime

If you opt out of the default New Tax Regime to claim traditional deductions, the basic exemption limits are tiered based on age groups:

2. Mandatory Filing Beyond Income Limits (The Criteria)

Even if your gross total income falls below the basic exemption thresholds, you are legally required to file an ITR if you meet any of the seventh-proviso conditions specified under Section 139(1) of the Income Tax Act:

High Bank Deposits: Depositing ₹1 crore or more in one or more current accounts, or over ₹50 lakh in aggregate savings bank accounts during the financial year.
Foreign Travel Expenditure: Spending more than ₹2 lakh on travel abroad for yourself or any other person.
High Utility Bills: Paying an annual electricity bill exceeding ₹1 lakh.
Tax Deductions (TDS/TCS): Having a total Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) of ₹25,000 or more (this threshold is ₹50,000 or more for senior citizens).
Business Turnover & Professional Income: Professional gross receipts exceeding ₹10 lakh, or total business turnover exceeding ₹60 lakh.
Foreign Assets: Holding any asset (including financial interest) located outside India, or having signing authority in any account located outside India.

3. Special Rules for Non-Resident Indians (NRIs)

NRIs must file an Indian tax return if their total income earned or received in India exceeds the basic exemption limits of ₹2.5 lakh (Old Regime) or ₹4 lakh (New Regime).

Unlike resident Indians, NRIs do not receive higher basic exemption limits for being senior citizens. Notably, NRIs must file a return for any capital gains generated from Indian assets, as they cannot offset short-term or long-term capital gains against the basic exemption limit like residents can.

4. Crucial Deadlines and Late Fees for AY 2026-27

Staying aware of the due dates is vital to avoid interest charges under Section 234A and late fees under Section 234F.

July 31, 2026: Due date for salaried individuals and taxpayers whose accounts are not required to be audited (typically filing ITR-1 and ITR-2).
August 31, 2026: Permanent extended deadline for non-audit business and professional taxpayers (typically filing ITR-3 and ITR-4 presumptive income).
December 31, 2026: The final deadline to file a Belated Return for this financial year.
March 31, 2027: The final deadline to file a Revised Return to correct mistakes made in the original filing.

Penalties for Missing the Due Date

If you miss the July/August deadlines, a late filing fee is levied:

₹5,000 if your total income exceeds ₹5 lakh.
₹1,000 if your total income is below ₹5 lakh.

Why You Should File a Return Voluntarily

Filing a Nil ITR or filing when your income is below the taxable limit offers massive financial advantages:

Seamless Loan & Visa Approvals: Banks and embassies routinely require 3 years of ITR receipts to check financial reliability.
Claiming Tax Refunds: If excess TDS was deducted on your salary, freelance payouts, or fixed deposits, the only way to get that money back is by filing an ITR.
Carrying Forward Losses: Stock market losses, business losses, or capital losses can only be carried forward to offset future profits if your return is filed before the original due date.

Frequently Asked Questions (FAQs)

Q1. Is ITR filing mandatory if my income is below ₹12 lakh in the New Tax Regime?

A: Yes, it can be. While you pay zero tax up to ₹12 lakh due to tax rebates, you are still legally required to file an ITR if your gross total income crosses the basic exemption limit of ₹4 lakh before deductions.

Q2. Can I file a paper ITR for FY 2025-26?

A: Almost all returns must be filed online (E-filing). The only exception is for super senior citizens (individuals above 80 years old) who do not have any income from business or profession; they are still permitted to file physical paper returns using ITR-1 or ITR-4.

Q3. What happens if I make a mistake in my original ITR?

A: You can rectify errors by filing a Revised Return under Section 139(5). For AY 2026-27, you can file a revised return anytime on or before March 31, 2027, or before the assessment is completed, whichever is earlier.

Conclusion

Tax compliance for FY 2025-26 comes with substantial structural updates, including enhanced exemption boundaries and clear-cut mandates for high-value spenders. Navigating these parameters early ensures you secure your financial profile, prevent automated tax notices, and leverage every available rebate seamlessly.

Don't wait for the tax season rush. Get in touch with our certified filing experts to securely file your tax returns accurately and on time.