finance Minister Nirmala Sitharaman on Saturday announced relief for millions of middle-class taxpayers, stating that individuals earning up to Rs 12 lakh annually will not have to pay income tax.
To taxpayers with up to Rs 12 lakh of normal income (excluding special rate income such as capital gains), a tax rebate is being provided in addition to the benefit from slab rate reductions, ensuring that no tax is payable by them,” Sitharaman said in her Budget speech.
Additionally, under the new income tax regime, a standard deduction of Rs 75,000 is available. This means salaried individuals with an annual income of up to Rs 12.75 lakh will have zero tax liability under the new tax regime. But does this mean they, along with others with no tax liability, are exempt from filing an income tax return?
Not necessarily.
ITR filing is mandatory for individuals whose income exceeds the basic exemption limit, which is Rs 2.5 lakh under the old tax regime and Rs 4 lakh under the new tax regime.
Moreover, tax experts have explained that tax return filing obligations are based on income level, not the actual tax liability. In simple terms, even if a taxpayer’s liability is reduced to zero due to rebates or deductions, they must still file an ITR reflecting their nil tax liability.
However, tax experts often recommend that taxpayers file their Income Tax Returns (ITRs) even when their tax liability is zero. This is because it helps maintain a clean financial record and can be beneficial in securing loans, visas, or other financial services.