According to the income tax website, till 31 March 2018, there were about 379 million Permanent Account Numbers (PAN) allotted to various entities. Out of these, 369 million or 97.46% PANs were allotted to individuals. But irrespective of the fact that you have been allotted a PAN, it is not mandatory to file an income tax return (ITR) if your income is less than the maximum exemption limit. But it is mandatory to have a PAN card to file an ITR. In FY2017-18, about 67 million returns were filed, which is about 18% of total PAN allotted. Read more to know when one needs to file tax returns.

When it’s mandatory

It is mandatory to file ITR if gross total income of an assessee, be it an individual, a Hindu Undivided Family (HUF), an Association of Persons (AOP) or a Body of Individuals (BOI), exceeds the maximum exemption limit. Gross total income is all income without considering exemption and deductions. The minimum exemption limit for the current assessment year—2018-19—is up to ₹2.5 lakh for an individual below 60, ₹3 lakh for an individual between 61 and 80, and ₹5 lakh in case of individuals who are above 80. For instance, if you are 30 years old and earned ₹3.5 lakh during the last financial year—2017-18—and invested ₹1.25 lakh during the year in various instruments such as Public Provident Fund and equity-linked savings schemes (ELSS) which qualifies for deduction under section 80C of the Income-tax Act 1961, then you will have to file the ITR as the gross income is more than maximum exemption limit of ₹2.5 lakh, irrespective of the fact that your net taxable income of ₹2.25 lakh (₹3.5 lakh minus ₹1.25 lakh) does not attract tax and is below the maximum exemption limit.

However, for a company or a firm, it is mandatory to file a return irrespective of income or loss. Also, in some cases, even if the income of an individual is less than the taxable income, she might have to file her returns. For instance, if an assessee has a bank account or any asset or any financial interest in any entity located abroad, then she must file her returns and also furnish details of such accounts, assets and financial interest in her tax returns.