The Importance of Filing Your Income Tax Return (ITR)

With the income tax return (ITR) filing deadline rapidly approaching, it’s crucial for taxpayers—especially those who are required to file non-audit ITRs—to act promptly. This year, the deadline is set for September 15. As of September 7, 2025, nearly 4.9 crore (precisely 4,89,23,231) ITRs have already been filed for the assessment year 2025-26 (AY26), according to data from the Income Tax Department. Among these, around 4.6 crore ITRs have been verified, and over 3.3 crore have been processed by the IT department.

Common Misconceptions About ITR Filing

Many individuals mistakenly believe that filing ITR is not mandatory if they do not have a positive income or have paid all their taxes in advance. This, however, is not true. Filing ITR is not only mandatory but also essential for many financial activities.

Why is ITR Filing Mandatory?

  1. Official Recognition of Tax Paid: Filing ITR is mandatory even if all taxes and interests have been paid and there is no refund due. Your tax payments are officially recognized only after you file and verify your total income and tax liability. The government will accept the tax you paid only after you confirm these details.
  2. Completion of the Process: If you do not file your ITR, the process remains incomplete and can invite penalties. It is mandatory for every individual whose income (before exemptions and deductions) exceeds the maximum exemption limit.
  3. Reporting of Advance taxes: Even if advance taxes have been paid, these taxes need to be reported to complete the self-assessment of income and taxes. This requirement persists even if you have sustained a loss during the financial year.

Penalties for Not Filing ITR

If you miss the deadline to file your ITR, you can submit a belated return. However, a late filing fee applies:

Additionally, non-payment of taxes can lead to interest charges, penalties, and prosecution. If you fail to pay your tax liability, you may face rigorous imprisonment from 3 months to 2 years. If the evaded tax amount exceeds ₹25 lakh, the punishment can range from 6 months to 7 years.

Other Reasons to File ITR

Filing your ITR is beneficial even if it’s not mandatory for you. It serves as proof of income, which is important for:

In summary, it’s imperative to understand the importance of filing your ITR. Not only does it ensure compliance with tax laws, but it provides you with a range of financial benefits and protects you from potential penalties. Make sure to file your ITR ahead of the September 15 deadline to avoid complications and secure your financial standing.

Radhika Goyal is Author of Taxconcept Gurugram head office, for deeply reported tax, gst and income tax articles on issues that matter. He splits her time between New Delhi and Bengaluru, and has worked...