Income Tax Slab: Exemption for not filing ITR is for Income up to Rs.2.5L or Rs.4L

Budget 2025 made various changes to direct taxation. New tax rate slab introduced, basic exemption limit increased, tax rebate limit raised under the New Tax Regime.

So now the question arises that for not filing an Income Tax Return (ITR), what will be the exemption limit – income up to Rs.2.5 lakh or Rs.4 lakh?

Section 139 says, that a person other than a company or a firm, is not required to file ITR if his total income does not exceed the maximum amount which is not chargeable to income-tax.

Confusion around Exemption Limit for not filing ITR

Is the maximum amount not chargeable to income tax is Rs.4 Lakhs (as per New Tax Regime) or Rs.2.5 Lakhs (as per Old Tax Regime)?

Interpretation 1: Rs. 2.5 Lakh is the whole amount not chargeable to Tax as Slabs of Old Tax Regime are still applicable on whole Income Tax Act.

Interpretation 2: New Tax Regime is a default regime. Also 115BAC starts with a non-obstante clause and it overrides whole of Income Tax Act. The Old tax regime is optional u/s 115BAC(1).

New Slabs under the New Tax Regime applicable from AY 2026-27 and onwards.

The basic exemption limit raised from the earlier Rs.3 Lakh to Rs.4 Lakh. And a 25% tax rate introduced which makes the tax slab count from 6 to 7. So, as per the new tax regime, people who are earning income up to Rs. 4 Lakh or less than that amount will naturally come into no tax zone, or, we can say 0% tax will apply. Means, the amount up to Rs.4 Lakh is exempt from taxation. So, in that case, the people can choose not to file ITR.

Now, if we talk about the Old Tax Regime, there has been no change in slabs under the Old Tax Regime:

Income Tax Slabs under the Old Tax Regime

No change in the old tax regime, then it also make no change in exemption limit. So, choosing old tax regime, it make your income up to Rs.2.5 lakh exempted form tax.