Furthermore, as a taxpayer, you should keep in mind that it is not mandatory for individuals, whether unemployed or students, to file income tax returns. Especially in case the income remains below these exemption limits, one has to submit an ITR.
Still, as a well-aware citizen, it is always advisable to file income tax returns. Filing helps in the creation of a government-backed digital record. This record can come in handy as income documents for even availing credit instruments and new jobs.
When filing ITR is recommended
Even those without any taxable income can benefit significantly from voluntary filing:
- Proof of income is often required for availing student visas, personal loans, education loans, and applications for government grants or scholarships.
- Claiming refunds is only possible by filing a return if excessive tax deducted at source (TDS) or advance tax has been paid. If the tax is not filed, then claiming the refund will not be permitted by the tax authorities.
- Major financial transactions such as deposits exceeding ₹50 lakh in a savings account require ITR documentation. If any such transactions have been initiated, then it is always prudent to collect all the relevant tax documents to comply with income tax scrutiny.
- Carry-forward of capital losses for tax purposes is permitted only if returns are filed. For example, short-term capital losses can be carried forward for up to eight assessment years to set off against future capital gains, helping reduce taxable income in subsequent years.
Key dates and compliance
The income tax department has extended the ITR submission deadline for the assessment year 2025-26 till September 15, 2025. Those who miss this deadline can file a belated return until 31 December 2025. Still, belated returns are permitted with a nominal penalty only.
Further, for assessment year 2025-26, if a belated return is filed after September 15, 2025, a penalty of ₹5,000 applies if income exceeds ₹5 lakh, whereas ₹1,000 is charged for lower incomes. Filing of taxes online through the official portal remains the most prudent method, and the selection of the correct ITR form from ITR-1, ITR-2, along with the others, is crucial depending on income source.
The Income Tax Department also provides the ITR 3, a tax return form that is used by individuals and Hindu Undivided Families who earn income from business or profession, along with other sources such as salary or capital gains.
Long-term benefits of filing
Filing an ITR permits taxpayers to establish a clean financial track record. This also acts as a critical prerequisite for availing personal loans, new credit cards, or traveling abroad.
For students, a sound tax record can assist in easing the process of securing seats in premium global institutions, helping with education loans and unique scholarships. The process demands minimal documentation, most notably PAN, Aadhaar card, and banking statements, allowing for ease of compliance for all.
Disclaimer: This article is for general information only and not legal or financial advice. Consult a qualified tax professional or financial advisor for updated, personalised guidance.
