ITR filing: The zero-tax income threshold has been increased from Rs 7 lakh to Rs 12 lakh.

Income Tax Slabs FY 2025-26 after Budget 2025: Finance Minister Nirmala Sitharaman’s big announcement that taxpayers will no longer have to pay tax for income up to Rs 12 lakh from FY 2025-26 onwards has been met with cheer from the middle class. This limit is Rs 12.75 lakh for salaried taxpayers since they can avail the benefit of Rs 75,000 standard deduction.
The zero-tax income threshold has been increased from Rs 7 lakh to Rs 12 lakh after rebate in the new income tax regime, excluding special rate incomes (eg. capital gains). From April 1, 2025, individuals earning up to Rs 12 lakh annually can avail full income tax rebate under Section 87A, resulting in zero tax liability.
Sitharaman also announced an increase in the basic income exemption limit to Rs 4 lakh from Rs 3 lakh under the new income tax regime.

Income Tax Return: Below Rs 12 lakh income – ITR needs to be filed?

The important question in the minds of taxpayers is: do they still have to file their income tax returns if their income is below Rs 12 lakh?
Also Read | Budget 2025 Income Tax calculator explained: Save up to Rs 1.1 lakh! How income tax slab changes will benefit taxpayers at different salary levels under new regime
From the next financial year, individuals earning up to Rs 4 lakh annually need not pay taxes or submit an income tax return (ITR).

CA Dr. Suresh Surana told ET, “The government provides relief to middle-class taxpayers by offering a rebate under Section 87A. This rebate allows individuals with income below the prescribed threshold to reduce their tax liability.”
So, it’s important to note that ITR filing remains mandatory for claiming the enhanced rebate.
According to Abhishek Mundada, Partner, Dhruva Advisors, “Filing an ITR is compulsory if you want to claim the rebate available under Section 87A. Those earning more than Rs 4 lakh but under Rs 12 lakh will not automatically qualify for Section 87A rebate if they do not file their ITR starting next year.”
The Rs 60,000 rebate under the new regime excludes special rate incomes like long-term or short-term capital gains.
Also Read | New vs old income tax regime after Budget 2025: Post income tax slab changes, which tax regime is better for salaried middle class taxpayers?

Below Rs 12 lakh income: What is the penalty for not filing an ITR?

For ITR filing for the next financial year (2025-26), if an individual earning between Rs 4 lakh and Rs 12 lakh fails to file their ITR by the deadline, they may receive a notification from the I-T Department regarding unpaid taxes.
“In response to this notice, the individual can claim the rebate available under Section 87A. However, there could be a penalty for non-filing of tax return suo-moto, i.e. on their own accord”, adds Mundada
CA Ashish Karundia notes that whilst assessing officers (AOs) previously had the power to levy penalties under Section 271F for delayed tax return submissions, this was seldom implemented.
“As a result, the legislature removed this penalty and introduced a system of late fees under Section 234F, effective from the Assessment Year 2018-19. This section now stipulates a late fee of Rs. 1,000 (where total income is up to Rs. 5 lakh) and Rs. 5,000 (where total income exceeds Rs. 5 lakh),” he adds.
For taxpayers required to submit ITR under Section 139 who miss the deadline, an additional charge of 1% per month or part thereof will be applied to the outstanding amount, after considering taxes already paid.
The interest calculation begins from the day following the due date and continues until either the return is filed or the assessment is finalised, whichever occurs first.
Also Read | Latest income tax slabs 2025-26: How much tax do individuals earning slightly above Rs 12 lakh have to pay? Marginal relief calculations explained

Income below basic exemption limit? Benefits of filing an ITR

Filing ITRs offers several advantages, even for individuals whose income falls under the basic exemption threshold. Although not legally mandated for such individuals, submitting a nil ITR (when income is below taxable limit) can be beneficial.
Mundada states, “Filing ITRs, even if they are nil ITRs, serves as income and address proof. This can help taxpayers get loans from banks and NBFCs approved with relative ease. If you are looking to take a foreign trip, most consulates and embassies also demand your ITRs for processing your visa application. It is generally recommended that individuals file their ITRs on time.”

Filing Income Tax Returns Below Basic Exemption: Key Requirements

Individuals must submit ITRs in specific circumstances, even when their annual earnings fall below Rs 3 lakh under the new tax structure, Rs 2.5 lakh under the old structure, or Rs 4 lakh in the forthcoming fiscal year’s tax framework. Section 139 of the Income Tax Act outlines these mandatory filing conditions:
* Ownership or beneficial interest in overseas assets
* Bank deposits exceeding Rs 1 crore in savings or current accounts within a fiscal year
* Foreign travel expenses surpassing Rs 2 lakh in one fiscal year
* Electricity consumption costs above Rs 1 lakh in a fiscal year
* Business turnover exceeding Rs 60 lakhs in a financial year
* Professional earnings (excluding specified business) above Rs 10 lakhs in a financial year
* TDS/TCS exceeding Rs 25,000, with Rs 50,000 threshold for senior citizens
Also Read | Income Tax Slabs FY 2025-26 explained: 20 FAQs individual taxpayers should check to understand tax rates, income tax benefit under new tax regime
Republished. Link to Original Article: https://timesofindia.indiatimes.com/business/india-business/itr-filing-with-latest-income-tax-slabs-post-budget-2025-will-taxpayers-with-income-below-rs-12-lakh-have-to-file-tax-return/articleshow/118325619.cms