For many taxpayers, the decision to file an income tax return (ITR) appears straightforward. If tax has already been deducted from salary or income falls below the taxable threshold, filing a return may seem unnecessary.
However, that assumption can prove costly.
Filing an ITR is not determined solely by whether tax is payable. Investors reporting capital gains, taxpayers claiming refunds, individuals seeking to carry forward losses and those holding foreign assets may all need to file a return, even if their final tax liability is nil.
As the filing season for Assessment Year (AY) 2026-27 gets underway, here is a detailed look at who must file an ITR, who should consider filing one and the deadlines taxpayers need to keep in mind.
Who must file an ITR?
The obligation to file an income tax return extends beyond taxpayers whose income exceeds the taxable threshold. According to the Income Tax Department, filing may also be necessary for those claiming refunds, reporting capital gains, carrying forward losses, disclosing foreign assets or meeting specific reporting requirements.
Here are some of the most common situations where filing an ITR becomes necessary.
Income above the exemption limit
The most common reason for filing an ITR is that income exceeds the applicable basic exemption limit under the chosen tax regime.
While deductions, exemptions and rebates may eventually reduce the tax liability, taxpayers should not assume that the absence of tax automatically removes the filing requirement. The obligation to file depends on the applicable provisions and the taxpayer's overall circumstances.
Claiming a tax refund
Many taxpayers end up paying more tax than they actually owe during the year.
This can happen when an employee changes jobs, when banks deduct TDS on fixed deposit interest, or when taxes are deducted without taking all eligible deductions into account.
In such cases, filing an ITR is generally necessary to claim a refund from the Income Tax Department.
Carrying forward stock market and mutual fund losses
This is one of the most overlooked reasons to file a return.
Investors who have booked losses in shares, mutual funds, property or other capital assets may be able to carry those losses forward and adjust them against eligible future gains. However, this benefit is generally available only if the return is filed within the prescribed due date.
Reporting capital gains
The rapid growth in retail investing has brought many taxpayers into the capital gains tax net.
Income earned from shares, mutual funds, exchange-traded funds (ETFs), bonds and property transactions may require disclosure in the return and could determine which ITR form a taxpayer must use.
Taxpayers who have sold investments during the year should carefully review their reporting obligations before filing.
Foreign assets and overseas income
Individuals holding foreign assets or earning income outside India may face additional disclosure requirements.
These can include foreign bank accounts, overseas stocks, employee stock ownership plans (ESOPs), foreign mutual funds and other financial interests held abroad.
Such taxpayers should ensure that the relevant details are reported in the appropriate schedules of their return.
Business and professional income
Freelancers, consultants, professionals and business owners are generally required to file returns using forms applicable to business or professional income.
The filing requirements, disclosures and deadlines may differ from those applicable to salaried taxpayers, making it important to select the correct form before filing.
Why filing an ITR can make sense even when it isn't mandatory
Tax experts often recommend filing a return voluntarily, even when there is no legal obligation to do so.
An ITR serves as an important financial document and is frequently sought by banks and financial institutions while evaluating applications for home loans, personal loans and other credit facilities. It is also commonly used as proof of income during visa applications and other financial transactions.
Maintaining a consistent filing record can therefore prove beneficial beyond tax compliance.
Documents to keep ready before filing
Before submitting a return, taxpayers should reconcile their income details across all available records, including Form 16, Form 26AS, the Annual Information Statement (AIS), the Taxpayer Information Summary (TIS), bank statements, capital gains statements and interest certificates.
Tax professionals recommend ensuring that the income reported in the return matches information available with the tax department to minimise the risk of notices arising from mismatches.
Taxpayers should keep the applicable filing deadline in mind before submitting their income tax returns. For most salaried individuals filing ITR-1 or ITR-2, the due date for AY 2026-27 is July 31, 2026. Those filing ITR-3 or ITR-4 in non-audit cases have until August 31, 2026. For taxpayers whose accounts are subject to audit, the deadline is October 31, 2026, while transfer pricing cases can be filed until November 30, 2026.
Missing the due date can lead to late-filing consequences and may also prevent taxpayers from carrying forward certain losses to future years.