ITR Filing– For salaried individuals in India, July is always a crucial month as it marks the peak of income tax return (ITR) filing season. But this year, one question has taken center stage: “If my annual salary is ₹7 lakh or less, do I still need to file an ITR?” The confusion stems from the government’s rebate under Section 87A, introduced in recent years, which offers tax relief to those earning up to ₹7 lakh annually under the new tax regime.Many taxpayers assume that zero tax liability automatically means no need to file returns. However, experts caution that this assumption can prove costly in the long run. Even if no tax is payable, not filing your ITR might block you from key financial benefits like visa approvals, loan sanctions, and refunds from TDS. Furthermore, different conditions apply under the old and new tax regimes, making it essential to understand the nuances before skipping the filing process.This detailed guide breaks down the legal requirements, expert opinions, case examples, and government guidelines to help you decide whether you must file your ITR if your salary is ₹7 lakh or below.
Understanding Section 87A: What It Means for You
Section 87A provides a rebate of up to ₹25,000 for individuals whose income does not exceed ₹7 lakh under the new tax regime.
Key Points About Section 87A
- Available only to resident individuals with net taxable income up to ₹7 lakh.
- Only applicable under the new tax regime.
- Rebate amount: 100% of income tax payable or ₹25,000 (whichever is lower).
- Final tax liability becomes zero after rebate.
Eligibility for 87A Rebate
| Particulars | Old Tax Regime | New Tax Regime |
|---|---|---|
| Salary (₹) | ₹7,00,000 | ₹7,00,000 |
| Standard Deduction (₹) | ₹50,000 | ₹50,000 |
| Net Taxable Income (₹) | ₹6,50,000 | ₹6,50,000 |
| Tax Payable Before Rebate (₹) | ₹23,400 | ₹23,400 |
| 87A Rebate (₹) | ₹0 | ₹23,400 |
| Final Tax Liability (₹) | ₹23,400 | ₹0 |
Should You File ITR Even If Your Tax is Zero?
Even if you qualify for a full rebate and pay zero tax, experts recommend filing ITR for various practical reasons.
Expert Advice: Why Filing is Still Important
- Proof of Income: Crucial for applying for home/education loans or visas.
- TDS Refunds: You might be eligible for refunds if TDS was deducted.
- Avoid Notices: Filing returns avoids scrutiny from the IT department.
- Carry Forward Losses: Only possible if ITR is filed on time.
Income Types That Still Require Filing
There are scenarios where filing becomes mandatory even if your salary is under ₹7 lakh.
Mandatory ITR Filing Conditions
- If total income before deductions exceeds the basic exemption limit.
- If income includes capital gains, rent, or foreign assets.
- If TDS has been deducted and refund is expected.
- If you’re self-employed or run a small business.
What If You Are Under the Old Tax Regime?
If you’re not under the new regime, the ₹7 lakh exemption won’t apply in the same way.
Key Differences Between Regimes
| Particulars | Old Regime | New Regime |
|---|---|---|
| Deductions Allowed | Yes (80C, 80D) | Mostly No |
| Standard Deduction | ₹50,000 | ₹50,000 |
| 87A Rebate (₹7L Income) | Not applicable | Fully applicable |
| Tax Filing Mandatory? | Yes | Depends |
Income Proof and Loan Benefits of ITR Filing
Filing an ITR can be your financial proof in multiple use-cases.
Financial Use-Cases of ITR Filing
- Required for home loan, car loan, personal loan approval.
- Acts as income certificate in absence of Form 16.
- Proof of financial discipline for visa and immigration purposes.
ITR Benefits in Financial Situations
| Use Case | Benefit of ITR Filing |
|---|---|
| Applying for Home Loan | Accepted as income proof |
| Visa Documentation | ITR copy is a mandatory document |
| Buying Term Insurance | Proof of income required |
| Startup/Freelancer Work | Valid financial credibility |
| TDS Refund Claim | Required to get money back |
When Filing ITR Becomes Absolutely Compulsory
Even if tax payable is zero, some conditions make ITR filing mandatory.
Conditions Mandating ITR Filing
- Deposited over ₹1 crore in current account.
- Spent over ₹2 lakh on foreign travel.
- Spent over ₹1 lakh on electricity in a year.
- Own foreign assets or income from abroad.
- Involved in business, partnership or company.
What Happens If You Skip Filing?
Not filing ITR, even when legally required, can lead to penalties and complications.
- Penalty under section 234F: ₹1,000–₹5,000.
- Delay in refunds.
- IT department may send a notice.
- Future loan or visa applications may get affected.
Documents Required for ITR Filing
Gather these documents before filing your return to avoid errors or delays.
- PAN card
- Aadhaar card
- Form 16 from employer
- Bank account details
- TDS certificates (Form 16A)
- Details of deductions under 80C, 80D, etc.
- Capital gains or interest income proofs
Departmental Contact Details for ITR Help
If you’re confused or need help with filing your ITR, you can reach out to the below contacts:
| Department | Contact Details |
|---|---|
| Income Tax Department | www.incometax.gov.in |
| Helpline Number | 1800 103 0025 / 1961 |
| Email Support | [email protected] |
| Grievance Redressal | e-Nivaran Portal on official website |
| CPC Bengaluru | [email protected] |
| Taxpayer Charter Cell | [email protected] |
| PAN Services (NSDL) | www.tin-nsdl.com |
FAQs
Q1. Is it mandatory to file ITR if my salary is ₹7 lakh and tax is zero?
A1. Not always, but it’s strongly recommended due to benefits like refunds and financial proof.
Q2. What if I fall under the old tax regime with ₹7 lakh income?
A2. You will likely need to pay tax and file ITR mandatorily.
Q3. Can I claim refund if TDS was deducted even though I have zero tax?
A3. Yes, but only if you file your ITR on time.
Q4. What is the penalty for not filing ITR on time?
A4. You can be fined ₹1,000 to ₹5,000 under Section 234F.
Q5. Are there any other benefits of filing ITR even with zero tax?
A5. Yes, it helps in getting loans, visas, insurance, and building a financial track record.
Filing ITR, even when not strictly mandatory, is a smart financial habit. It not only keeps you compliant with tax laws but also opens the door to numerous future benefits. Don’t wait till the last day—file early, file smart.