Income Tax Returns: Everything You Need to Know

An ITR is the form you file with the Income Tax Department to tell the government what you earned, what tax you already paid, and whether you owe more or get money back. You file one if your income crosses the exemption limit, or if you've done something like a large bank deposit or heavy foreign travel spending that year.

Key Takeaways

• The new rules have an exemption limit of ₹4,00,000. However, resident individuals under the new regime can receive a rebate on slab-rate tax when total income is up to ₹12,00,000 under Section 87A.
• ITR-1 and ITR-2 filers have until 31 July 2026 to file for FY 2025-26. Business filers who do not need an audit have a month. These filers can file until 31 August 2026.

Filing Season is when the common question always arises, i.e., Do I Really Have To File? The Income Tax Return (ITR) form refers to the yearly submission of the income and tax details by the taxpayer to the Income Tax Department using its website portal. 

It is important to note that the Income earned during FY 2025-26 shall be recorded for Assessment Year 2026-27. It includes those earning salaries, freelancers, businessmen, and even those without any salary if they are in some kind of transaction. Late filing will result in delays in refunds, inability to carry forward losses, and also incur penalties.

What is an Income Tax Return?

ITR is an income tax form in which one has to disclose their total income during the year, tax deducted or paid as advance tax, and also tax payable. All these different forms of ITR would be valid according to the Income Tax Act, 1961, in respect of Assessment Year 2026-27. The Income Tax Act, 2025 would come into effect from April 1, 2026. 

Which form applies to you depends on your income source. Eligible residents with income up to ₹50 lakh may use ITR-1 with up to two house properties and eligible Section 112A LTCG up to ₹1.25 lakh. Beyond that, or with other capital gains to report, that's ITR-2 territory. Business or professional income goes under ITR-3, and if you're on presumptive taxation, you'll use ITR-4, or Sugam. 

Who is Eligible to File an ITR?

You cross into "must file" territory once your income passes the basic exemption limit, though a few situations pull you in even earlier.

Note: New regime, resident individuals only. Rebate applies to slab-rate tax and does not cover income taxed at special rates (e.g., certain capital gains). 

These triggers come from the Seventh Proviso to Section 139(1). Any single one of them, and you must file, no matter how far below the exemption limit your income sits.

Who Must File ITR Regardless of Income?

Companies and partnership firms don't get an exemption at all. They file every year, profit or no profit, loss or no loss. Business owners crossing ₹60 lakh in turnover and professionals earning past ₹10 lakh in receipts land in the same "no excuses" category, even under presumptive taxation. Limitations on exemptions are solely available to Individual/HUF Taxpayers.

Partnership firm

Mandatory, even at zero income

Business (turnover above ₹60 lakh)

Mandatory

Professional (receipts above ₹10 lakh)

Mandatory

Individual or HUF