Many people assume that once Tax Deducted at Source (TDS) has been deducted from their income, they are automatically exempt from filing an Income Tax Return (ITR). However, TDS deduction does not remove the obligation to file an ITR. TDS is just one part of your tax process; it is not the final step. Whether or not you need to file an ITR depends on several factors, primarily your total income.
In this guide, we will clarify whether you are required to file an ITR even if you have already filed your TDS return.
What is an Income Tax Return (ITR)?
An Income Tax Return (ITR) is a statement that a taxpayer submits to the Income Tax Department of India in which the taxpayer provides details about their total income, deductions, tax liability, and taxes paid during a financial year.
Purpose of Filing ITR
- It declares income from various sources such as salary, business, interest, rent, or capital gains.
- It calculates total tax liability based on applicable tax slabs.
- It adjusts the taxes which has already been paid, like TDS (Tax Deducted at Source), advance tax, or self-assessment tax.
- It helps in claiming tax refunds if excess tax was paid.
- It ensures legal compliance and creates an official financial record.
What is TDS?
TDS is a method used by the government to collect tax at the very source of income. This deducted tax is then deposited with the Income Tax Department under your PAN. For example:
- Your employer deducts TDS from your salary.
- Your bank deducts TDS from interest earned.
- A client deducts TDS from your professional fees.
How TDS Appears in Official Records
1. Form 26AS: This is your annual tax credit statement and includes:
- All TDS entries
- Advance tax paid
- Self-assessment tax
2. Annual Information Statement (AIS): A detailed report that includes:
- Interest from savings and fixed deposits
- High-value investments
- TDS and TCS transactions
TDS ≠ Irrelevance of ITR
- TDS is only a portion of your tax liability: TDS is tax withheld at the source when someone pays you. It is a part of your tax liability, and if your total income exceeds the exemption limit, you must file an ITR, even if TDS has already been deducted.
- ITR reconciles all income & tax paid: When you file an ITR, you are declaring all income, including salary, interest, capital gains, etc. and reconciling it with taxes already paid via TDS or advance tax. If excess tax has been deducted, filing ITR ensures you receive a refund. If there is a shortfall, the return calculates additional liability.
When is Filing ITR Mandatory Despite TDS Deduction?
You need to file your ITR for the following reasons, even if you file TDS:
1. Income Exceeds the Basic Exemption Limit
If your gross total income before deductions (like 80C) exceeds the limits below, ITR filing is mandatory:
| Regime | Below 60 years | 60–79 years | 80+ years |
| Old Regime | ₹2.5 lakh | ₹3 lakh | ₹5 lakh |
| New Regime FY24–25 | ₹3 lakh (all) | ₹3 lakh (all) | ₹3 lakh (all) |
| New Regime FY25–26 | ₹4 lakh | ₹4 lakh | ₹4 lakh |
Example
If you are 45 years old and earn ₹4 lakh annually with TDS already deducted, you still need to file an ITR because ₹4 lakh is more than ₹2.5 lakh.
2. Total TDS/TCS in a Year is ₹25,000 or More
Even if your total income is below the exemption limit, you’re required to file an ITR if:
- TDS or TCS is ₹25,000 or more
- Or, ₹50,000 or more in the case of senior citizens
Example
You are retired and earn ₹2 lakh in bank interest, but your bank deducted ₹30,000 as TDS.
You must file an ITR even if your total income is under the threshold.
3. High-Value Financial Transactions
Under Section 139(1) of the Income Tax Act, 1961, the ITR is mandatory if you meet any of these:
- Deposited ₹1 crore or more in a current account
- Deposited ₹50 lakh or more in a savings account
- Spent ₹2 lakh or more on foreign travel
- Paid ₹1 lakh or more in electricity bills in a year
- Annual turnover exceeds ₹60 lakh (business) or ₹10 lakh (profession)
Example
You are a homemaker with ₹2.9 lakh income (below threshold), but your electricity bill exceeds ₹1 lakh; you must file an ITR.
4. Want to Claim a Refund on Excess TDS
TDS is often more than your actual tax liability, especially for:
- Fixed deposits
- Freelancers or consultants without deductions
- Senior citizens with only interest income
The only way to claim a refund of extra TDS is by filing your ITR.
5. To Carry Forward Losses
If you have capital losses, either from stocks, property, or business losses, you can carry them forward to offset future income, but only if you file ITR on or before the due date.
Example
You incurred a ₹1.5 lakh capital loss in 2024 from mutual funds.
To carry it forward to next year and set off against gains, you need to file an ITR on time.
6. To Maintain Compliance and Avoid Penalties
Even if you are not required to file an ITR, submitting an ITR helps to:
- Build a financial history that is helpful for loans and visas
- Avoid future notices from tax authorities
- Keep your income legally declared
- Ensure clean tax records for yourself or your business
ITR Form and Who Should File It?
| ITR Form | Who should file it |
| ITR-1 (Sahaj) | Resident individuals with income from salary/pension, one house property, and other sources, whose income is less than ≤ ₹50 lakh. |
| ITR-2 | Individuals/HUFs with capital gains, foreign assets, or higher income |
| ITR-3 | Individuals/HUFs with business or professional income |
| ITR-4 (Sugam) | Those under presumptive taxation, business/pro income ≤ ₹50 lakh |
Consequences of Not Filing
| Consequence | |
| Late Filing Fee | Up to ₹10,000 under Section 234F |
| Interest on Tax | Additional interest under Sections 234A, 234B, 234C |
| No Refund | You cannot claim a refund for excess TDS. |
| Audit Risk | You may receive notices or face scrutiny. |
| Loss of Tax Benefits | Carry forward of losses is not allowed. |
What to Do If You Have Already Had TDS Deducted?
- Assess your total income: Add salary, interest, and other earnings.
- Check TDS/TCS totals: Ensure whether threshold limits have been crossed.
- Compile documents: Salary slips, Form 16, interest certificates, Form 26AS.
- File ITR even if income is below the exemption limits, especially if TDS/TCS is more than ₹25,000 or other conditions apply.
Conclusion
In conclusion, while Tax Deducted at Source (TDS) shows some portion of tax has already been paid, it does not remove the obligation to file an Income Tax Return (ITR) if your total income crosses the exemption limit or you meet specific financial criteria. Filing ITR is essential for claiming refunds, carrying forward losses, maintaining financial records, and avoiding penalties. It is also a valid proof of income for various official and financial purposes. Therefore, it is important not to assume TDS alone is sufficient. Filing ITR is not an exception in any case!
