Tax Filing Threshold: When Do You Need to File in India?
If you run a startup or work as a freelancer, the biggest question is – when do I have to file taxes? The answer hinges on a few numbers set by the government. Below we break down the key thresholds for income tax, GST and a couple of special cases.
Income Tax Filing Limits
For individual taxpayers, the basic exemption limit for the FY 2024‑25 is ₹2.5 lakh for those under 60 years of age. If your total taxable income is below that amount, you technically don’t have to file an ITR. However, if you earn any of the following, you must file:
Salary or pension exceeding ₹2.5 lakh
Business or professional income above ₹2.5 lakh
Capital gains, even if the total stays under the exemption
Rental income above ₹2.5 lakh (after deductions)
For senior citizens (60‑80 years) the exemption jumps to ₹3 lakh, and for super seniors (above 80) it’s ₹5 lakh. Keep an eye on these figures each year because the Finance Ministry tweaks them occasionally.
GST Registration Threshold
Goods and Services Tax applies once your turnover crosses the prescribed limit. The threshold differs by business type:
Service providers: ₹20 lakh (₹10 lakh in special category states)
Suppliers of goods: ₹40 lakh (₹20 lakh in special category states)
If you’re just below the limit, you can still opt‑in voluntarily – many startups do it to claim input tax credits early. But once you cross the limit, registration is mandatory, and you’ll need to file monthly returns.
Another thing to watch out for is the e‑commerce operator threshold. If you sell on platforms like Amazon or Flipkart and your gross sales exceed ₹10 crore in a year, you must register for GST even if your own turnover is lower.
What about TDS? If you’re liable to deduct tax at source (e.g., paying contractors), you must file quarterly TDS returns irrespective of your income level. The filing deadline is the 7th of the following month, and missing it invites penalties.
For companies, the filing requirement is unconditional – every incorporated entity must file an income tax return, even if there’s a loss. The same goes for LLPs and partnership firms.
So, how do you stay on top of all these numbers? The easiest way is to keep a simple spreadsheet that tracks:
Annual gross receipts for GST
Total taxable income for income tax
Any TDS obligations
Update it monthly and you’ll know exactly when you cross a threshold.
Finally, remember that late filing isn’t just a paperwork issue – it can lead to interest, penalties, and even a notice from the tax department. Filing early gives you time to correct mistakes and avoid the rush.
Bottom line: Know your numbers, mark the key dates on your calendar, and file as soon as you hit the limit. That’s the surest way to keep your startup’s tax health in check while you focus on growth.
Navigating the tax obligations as a small business owner can be daunting, especially when determining how much income mandates a tax filing. This article unravels the income threshold requirements, ensuring small businesses know exactly when they are required to file taxes. Understanding these fundamentals not only keeps you compliant but also helps in efficient financial planning. Equipped with interesting facts and practical tips, this piece aims to guide business owners through the maze of tax requirements.
