If you're a student or out of work in India, you might be wondering if you need to file an Income Tax Return (ITR) for the year 2025–26. Most students and people who are unemployed do not have to file taxes, according to the law. Still, there are a number of strong reasons why you should think about proceeding with your File ITR. Here is a full explanation of the rules and the best reasons to file on your own.
The most recent Indian tax rules for AY 2025–26 say that you only need to file an ITR if your total income is more than these amounts:
old income tax slab: ₹2.5 lakh a year.
The new income tax slab is ₹3 lakh per year, although it will go up to ₹4 lakh for the fiscal year 2025–26 in amendments to the Union Budget.
Most students and persons who are out of work make less than these amounts, therefore they don't have to itreturn. But there are some cases when you have to file an ITR even if your total income is below the exemption limit. Some of these are:
Deposits of more than ₹50 lakh in cash into a savings account in one year
More than ₹1 crore in a current account
Business income of more than ₹60 lakh or professional income of more than ₹10 lakh each year, then timely TDS filing becomes mandatory to avoid penalties and ensure compliance
Paying more than ₹1 lakh a year on electricity bills
If ₹25,000 or more has been taken out of your paycheck for taxes (₹50,000 for seniors)
Having foreign accounts or valuables, or spending more than ₹2 lakh on travel abroad
For example, a student who gets money from abroad to pay for school and puts more than ₹50 lakh in a savings account in a year will have to file ITR, even if they don't have any other income.
Reliable proof of income is one of the most important reasons to file your ITR even if you don't have to. An ITR that has been filed is an official record of income. This is particularly crucial for things like:
School loans
Scholarships for students from outside the US
Visa applications for countries that look closely at your finances, such the US, UK, Canada, and others
Hostel or PG housing
For example, a student in Canada who wants a scholarship might have to submit their ITR from the last two years as proof of income, even if it shows "nil." Filing through e filing return makes this process easier and traceable.
You can only receive your money back if you file your ITR when you had TDS taken out of your bank interest, part-time job, or freelance work. This commonly affects students who are doing internships, freelancers, or persons who have fixed deposits.
For Example, an intern who earned ₹50,000 during summer training had ₹5,000 taken out as TDS. Because their income is below the taxable limit, they can collect the full refund by filing an ITR using the efilingincometax system.
When you need to make big purchases in the future, including placing a lot of money in your account or buying financial products, your ITR records will make it easy to inform banks or the government where your money originated from. This stops the tax officials from probing too carefully later.
For instance, it will be simpler for a recent graduate to handle salary-based tax compliance when they begin their first job if they have already filed a "nil ITR."
If you've lost money on stocks, mutual funds, or cryptocurrencies, you can file an ITR and keep those losses for up to eight years. You can utilize them to pay less in taxes when you make money.
For instance, a student who buys shares loses ₹20,000 in FY 2024-25. They can utilize this loss to lower their taxes when they start producing money later.
Filing an ITR helps you build a documented credit and financial history, even if you don't make any money. This is helpful for the future:
Getting loans approved for personal, school, or housing use
Credit card applications
Renting or leasing property
Job applications, especially for jobs that include dealing with money
For example, a graduate who is looking for a job and wants a ₹7 lakh college loan might have to show proof of their parents' income as well as their prior ITRs. Having an ITR history makes it easier to get loans approved swiftly.
If you have your PAN, Aadhaar, and bank account information, you can usually file a basic ITR online quickly using India's direct tax system. You will always be able to find your documents when you need them if you keep doing this.
For instance, a student who wants to get a government scholarship might put in their ITR form immediately once to show proof of income, without having to wait for extra documentation.
Filing your ITR every year might assist you handle more intricate financial issues and deals as your business or career evolves. As your financial compliance improves, you can avoid missed opportunities and late costs.
For instance, a recent graduate who has already filed a "nil ITR" will have an easier time dealing with salary-based tax compliance when they start their first job.
While students and unemployed people with incomes below the taxable threshold are generally not required to file an ITR, doing so is often a smart investment in your financial future. You gain essential documentation, build credibility, unlock the ability to claim refunds, and smooth the path for loans, visas, and other financial activities. Whether for "nil" returns or low incomes, filing ITRs on a regular basis through proper audit filing practices creates a strong basis for future financial success
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