ITR or Income Tax Return is a form you submit to the Income Tax Department that details your income earned and taxes applicable for a specific financial year (April 1st to March 31st of the following year).

Filing your ITR is important for a couple of reasons;

• Tracks your tax liability: It helps the government determine the income tax you owe based on your income sources and deductions claimed.
• Claim tax refunds: If you’ve paid more tax than you owe, filing an ITR allows you to claim a refund from the Income Tax Department.

While several taxpayers understand the relevance of paying taxes on time, some still get confused about whether they need to file ITR when they have paid the advance tax.

ITR and advance tax are integral components of the taxation system in India, each serving distinct roles. ITR is a formal declaration submitted by individuals and entities to the Income Tax Department, detailing their income earned during a financial year.

ITR filing is obligatory for those whose total income exceeds the specified threshold, ensuring compliance with tax laws and facilitating accurate reporting of financial affairs.

On the other hand, Advance Tax is a system whereby taxpayers settle their income tax obligations in instalments throughout the financial year, rather than in a lump sum at year-end.

Do you need to file an ITR even when you have paid all the taxes in advance?

According to the IT department, filing of income tax returns for individuals is mandatory for every person whose income (before considering certain exemptions and deductions) exceeds the maximum exemption limit. With effect from Assessment Year 2020-21, it is mandatory for every person, who is not required to furnish a return of income under any other provision of section 139(1), to file a return of income if during the previous year he/she:​​

1. Has deposited an amount (or aggregate of amount) over Rs. 1 crore in one or more current accounts maintained with a bank or a cooperative bank.
2. Has incurred aggregate expenditure over Rs. 2 lakh for himself or any other person for travel to a foreign country.
3. Has incurred aggregate expenditure over Rs. 1 lakh towards payment of electricity bill.
4. ​Fulfils such other conditions as may be prescribed.

 The CBDT vide notification No. 37/2022, dated 21-04-2022, has notified additional conditions under the seventh proviso to section 139(1)​​ whereby return filing is made mandatory. These additional conditions are as follows: 

1. If total sales, turnover or gross receipt of the business exceeds Rs. 60 lakh during the previous year; or
2. If the total gross receipt of the profession exceeds Rs. 10 lakh during the previous year; or
3. If the total of tax deducted and collected in the case of a person during the previous year is Rs. 25,000 or more. The threshold limit shall be Rs. 50,000 in case of a resident individual of the age of 60 years or more; or
4. If the aggregate deposit in one or more savings bank accounts of the person is Rs. 50 lakhs or more during the previous year.