Who Should File ITR for FY 2025-26 (AY 2026-27)?

Income Tax Return works as a financial report to the government. For startups, even if they didn’t earn enough to pay tax there are several triggers like a high bank deposit, foreign investment, or TDS deducted, that make the filing mandatory. And if you're a registered company or LLP, filing isn't optional, it's compulsory, every single year. 

In this blog we will discuss in detail who is mandatorily required to file ITR for FY 2025-26 along with their due dates, penalties and what happens if you don't file by the deadline. This guide will not only help in understanding the deadlines & consequences of non-filing but will also help individuals to understand why filing is important even if not mandatory. 

Who is Mandatorily Required to File ITR for FY 2025-26?

File your Income Tax Return for FY 2025–26, if you fall into any of the following categories:

1. Income Exceeds the Basic Exemption Limit:

The taxpayer must mandatorily file an ITR if they cross the Basic Exemption Limit of ₹4 lakh under the new tax regime regardless of age. However, the exemption limit under the old tax regime is between ₹2.5 lakh to ₹5 lakh based on the taxpayer's age.

Basic Exemption Limits under Old Regime based on Taxpayer’s Age:

2. Companies and Firms (No Exemption):

If the taxpayer is a company or a firm, filing is mandatory irrespective of profit or loss. This means your Private Limited Company, LLP, or OPC must file an ITR for FY 2025-26 even if it had zero revenue.

3. You Want to Carry Forward Losses:

If you have losses from business/profession or under capital gains, you will not be allowed to carry them forward to the next years unless you file the return before the due date. 

For most startups operating at a loss in early years, this is critical, unfiled losses are lost permanently.

4. You Have Foreign Assets or Income:

If you have earned from or invested in foreign assets during the financial year, ITR filing becomes mandatory. This covers ESOP holders with stock in foreign parent companies, founders with overseas bank accounts, and startups with foreign subsidiaries.

5. You Want a Tax Refund:

If you want to claim an income tax refund, you must file an ITR, the department does not process refunds automatically.

6. You Need a Visa or Loan:

If you wish to apply for a visa or a loan, an ITR acknowledgement is typically required as proof of income by banks, NBFCs, and embassies.

Mandatory ITR Filing Even if Income is Below Exemption Limit

There are certain scenarios where income tax return filing becomes mandatory even if your income is below exemption limit. This is the part where most founders get confused. Even if your income falls below the basic exemption limit, it is mandatory to file an ITR if you meet any of these conditions:

ITR Filing Deadlines for FY 2025-26 (AY 2026-27)

Unlike previous years where most taxpayers had a common July 31 deadline, CBDT has introduced a staggered ITR filing calendar that assigns different deadlines based on your ITR form type, income sources, and audit requirements.

The Due date for ITR Filing for FY 2025-26(AY 2026-27) is as follows: 

Though the Income Tax Act, 2025 came into force on April 1, 2026, the ITR you file this year for income earned in FY 2025-26 is still governed entirely by the Income Tax Act, 1961, because the return relates to income earned before April 1, 2026.

What Happens if You Don't File by the Deadline?

Failure to file your ITR by the due date may result in a late filing fee of ₹5,000 under Section 234F, and interest charges under Section 234A. If your income is below ₹5 lakh, the penalty is reduced to ₹1,000.

Beyond penalties, here's what else you lose:

• Loss carry-forward wiped out: Business losses and capital losses cannot be carried forward if the return is filed late.
• Regime choice restricted: Late filers may lose the option to switch between old and new tax regimes.
• Loan and visa delays: Banks and embassies require timely ITR acknowledgements.
• Increased scrutiny risk: Non-filers attract attention from the Income Tax Department.

Founder Scenario:

Priya runs a bootstrapped SaaS startup incorporated as a Private Limited Company in Bengaluru. Her company barely broke even in FY 2025-26, revenue of ₹18 lakh, expenses of ₹17.5 lakh. She thinks since there's no profit, she doesn't need to file an ITR.

She's wrong. As a company, she must file an ITR regardless of profitability. Missing the 31 October 2026 deadline (audit case) means a ₹5,000 penalty and the loss of ₹50,000 in business losses she could have carried forward. One missed filing can cost far more than it saves.

Special Rules for NRI Founders

NRI or not, any individual whose income exceeds ₹2.5 lakh under the old regime or ₹4 lakh under the new regime for FY 2025-26 is required to file an income tax return in India. There is no higher threshold for senior or super-senior citizen NRIs.

Unlike resident Indians, if there is a long-term or short-term capital gain, non-residents are not eligible to benefit from the basic exemption limit. Hence, even if the capital gains do not exceed the basic exemption limit, the NRI must file an income tax return.

Why File Even if You Don't Have to?

Even when filing isn't compulsory, it is almost always the smarter move for a founder. Here's why:

• Carry forward losses: Startup losses in early years can be set off against future profits, reducing your tax outgo when you finally turn profitable.
• Build a financial record: Lenders, investors, and banks rely on ITR history as proof of financial discipline.
• Claim TDS refunds: If vendors or clients have deducted TDS on payments to you, the only way to claim it back is through a filed ITR.
• Faster loan processing: Most business loan applications require 2–3 years of ITR filings.
• Foreign remittances: Banks require ITR filings for outward remittances above prescribed limits.

Conclusion

Filing your ITR isn't just a compliance checkbox, it's one of the most important financial hygiene habits for any startup founder. It protects your losses, keeps your credit profile strong, and ensures you're never caught off guard by a penalty notice. If you're a registered company or LLP, filing is non-negotiable regardless of your revenue. Don't wait for the deadline, start organising your books now.