Who is Exempted from Filing ITR and Should They Still File Their Returns?

ITR filing AY 2024-25: Is it mandatory to file ITR?

Yes, it is mandatory to file ITR for individuals whose annual income is above the basic exemption limit i.e. Rs.2.5 lakhs under the old regime and Rs.3 lakhs under the new regime. In addition to this, there are certain other conditions or situations in which ITR filing is mandatory, even if the annual income is below the basic exemption limit.

• If you have annual bank deposits of more than Rs.50 lakhs.
• If you have annual current account deposits of more than Rs.1 crore.
• If you have annual sales turnover above Rs. 60 lakhs.
• If your professional income exceeds Rs.10 lakhs.
• If your electricity bill exceeds Rs.1 lakhs.
• If your TDS/TCS deducted exceeds Rs.25,000.
• If you have income from foreign assets
• If your annual expenses on foreign travel are Rs.2 lakhs.

Categories Exempt from Income Tax in India

While the income tax slabs determine the tax amount payable for most individuals, there are certain categories that are entirely exempt from paying income tax. Read below to find out who all are exempted from filing ITR.

Income Tax Exemption for Scheduled Tribes in Northeastern States and Ladakh

Section 10(26) of the Income Tax Act offers a tax exemption benefit to specific residents of northeastern states and the Union Territory of Jammu and Kashmir. This exemption applies to members of Scheduled Tribes residing in:

• Tripura
• Mizoram
• Manipur
• Nagaland
• Assam
• Arunachal Pradesh

Additionally, tribal communities residing in the Ladakh region of Jammu and Kashmir are also included in this exemption.

Exemptions for individuals in certain areas

The Income Tax Act, under Section 10(26), offers an exemption from income tax for specific income earned in designated areas. This exemption applies to two categories:

Scheduled Tribe Income in Notified Tribal Areas: Members of a Scheduled Tribe residing in areas designated by the Sixth Schedule of the Constitution are exempt from income tax on income generated within those areas. This includes income from sources like dividends or interest on securities.

Here are some specific examples of these notified tribal areas:

• North Cachar Hills District (Assam)
• Karbi Anglong District (Assam)
• Bodoland Territorial Areas District (Assam)
• Khasi Hills District (Meghalaya)
• Jaintia Hills District (Meghalaya)
• Garo Hills District (Meghalaya)

Additionally, the entire states of Manipur, Tripura, Arunachal Pradesh, Mizoram, and Nagaland are covered by this exemption. Similarly, the Ladakh region of Jammu and Kashmir is also included.

What's Not Exempt Under Section 10(26)?

While Section 10(26) offers tax relief, it's important to understand that it applies only to specific income sources and locations. Income from Outside Designated Areas: Income generated from activities like renting property or conducting business outside the designated tribal areas or states mentioned in Section 10(26) won't be exempt from income tax. This means income earned outside these zones will be taxed according to regular income tax slabs.

Filing ITR Even With Section 10(26) Exemption

Section 10(26) offers tax exemption benefits to certain individuals. However, even if your income falls under this exemption, filing an income tax return (ITR) might still be advisable. Here's why:

• Claiming and Reporting Income: While you won't pay tax on income earned within designated areas under Section 10(26), it's still essential to report that income on your ITR. This helps maintain an accurate record of your financial situation.
• ITR Filing Threshold: Remember, you are still required to file an ITR if your total income surpasses the limit set by the ITD (Income Tax Department), regardless of the exemption under Section 10(26).

ITR Exemption for Specific Senior Citizens

The Income Tax Act in India offers senior citizens some well-deserved breaks. Individuals between 60 and 79 years old are considered senior citizens and benefit from a higher basic exemption limit compared to younger taxpayers. This limit currently sits at ₹3 lakh. Super senior citizens, those 80 years and above, enjoy an even more generous exemption limit of ₹5 lakh. But there's more! Under Section 194P, some seniors can skip filing an ITR altogether. This applies to individuals 75 and over who receive both pension income and interest income from a specific bank account. If you meet this criterion, you can opt out of filing by submitting a declaration in Form 12BBA to the bank where you receive this income. The bank will then assess and deduct any applicable tax directly from your pension or interest. Remember, this exemption has specific requirements. If your situation is more complex or you don't qualify, filing an ITR might still be necessary. Consider consulting a tax expert for personalized guidance on ITR filing and potential benefits for senior citizens. Book eCA Now!