Irrespective of whether your employer has deducted tax at source (TDS) on your salary or you have paid tax on your own, you should file your income tax return (ITR) if you fit certain criteria.
Under Section 139(1)(b) of the Income tax Act, 1961, it is mandatory to file returns if gross total income of an assessee—be it an individual, Hindu Undivided Family (HUF), Association of Person or Body of Individual—exceeds the maximum exemption limit which is ₹ 2.5 lakh for an individual below the age of 60 and ₹ 3 lakh for an individual between the age of 60 and 80 and ₹ 5 lakh for those above 80 years. Gross total income is the income you earn without factoring in exemption and deductions.
In some cases, even if your income is less than taxable income, you might have to file your returns. For instance, if you have a bank account or any asset or any financial interest in any entity located abroad, you must file returns and also furnish details of such accounts, assets and financial interest in the return.
If you are supposed to file returns but fail to do so, the assessing officer (AO) can send a notice to file the returns. If you fail to file the return even after the notice from AO, you may have to pay a penalty. Further, in case of non-compliance of notices and warnings by the department, if you fail to file your returns, it may attract imprisonment under Section 276CC of the Act for three months to two years along with a fine. If the amount of tax sought to be evaded exceeds ₹ 25 lakh, the imprisonment may extend to six months to seven years along with fine.