This is a rudimentary question, but most frequently tossed to us by the taxpayers. Here is the answer to all such queries.
What is Income Tax Return (ITR)?
Income Tax Return (ITR) is a document wherein any person informs the Government about his total income during the previous year (1st April to 31st March) from different sources and applicable taxes on it are paid accordingly.
Companies, LLPs, and Partnership firms:
Once the company, LLP, or firm is incorporated, irrespective of they doing business or making profits, Income Tax Return has to be filed. This means, a company has not done any business or has done business but incurred a loss or done business but made a profit of, say, just Rs.10,000, all of them have to file the Return of Income.
Basic Exemption Limit of Resident Individuals – As per Income Tax Laws, ITR must be mandatorily filed if Gross Total Income (GTI means income before various deductions under Chapter VIA like 80C, 80D, etc.) during the financial year exceeds the basic exemption limit.
|Age Group||Exemption Limit (Rs.)|
|Individuals (both Residents and NRIs) below 60 years of age||2,50,000|
|Resident Individuals (not applicable to NRIs) over 60 years but below 80 years||3,00,000|
|Resident Individuals (not applicable to NRIs) over 80 years||5,00,000|
My Total Income is below the exemption limit; am I obliged to file ITR?
In the following cases, even if the total income is less than the exemption limit, the return has to be filed by Individuals.
|Individual has spent an amount or aggregate of amounts exceeding Rs 2 lakh for himself/herself or any other person for travel to a foreign country|
|Individual has deposited an amount or aggregate of amounts exceeding Rs 1 crore in one or more current accounts maintained with a bank or co-operative bank (the limit is per bank; deposits can be in any mode like cheque/ account transfer/cash deposit)|
|Individual has paid electricity bill exceeding Rs 1 lakh in a single bill or on aggregate basis during the financial year|
|Ordinarily resident individuals having income from foreign countries and/or assets in foreign countries and/or having signing authority in any account outside India|
|If an individual’s gross total income exceeds the exemption limit before claiming tax exemption on capital gains under sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA, or 54GB|
A few illustrations to have a better understanding of the provisions–
- Ramlal’s income is Rs.4,80,000 per year. He has not done any investments in tax-saving instruments. How much taxes does he have to pay?
The tax at 5% (Rs.4,80,000-2,50,000) is Rs. 11,500. He can take rebate u/s 87A up to Rs.12500. This means, NIL Taxes is payable.
Should he still file the return? Yes, he has to file as the Gross Total Income has exceeded the basic exemption limit
- A family of 3, Ramesh earns Rs.2,50,000, his wife earns Rs.2,00,000 and daughter earns Rs.12,00,000. Mr. Ramesh has spent Rs.3,00,000 on a package trip to Singapore, Malaysia, and Thailand during FY 2020-21. Should Ramesh file IT Return?
Ramesh’s total income is below the exemption limit, but he has spent over Rs. 2 Lakhs on a foreign trip for the entire family. Under this condition, he has to file the return, even if there is no taxable income.
- Kanthilal was in England, returned to India, and became a resident here. He has only interest income in India, totaling Rs.2 Lakhs during FY 2020-21. However, he has 2 bank accounts in England. Should he file Income Tax Return?
Yes; he has to file the return as he possesses foreign accounts, even though there is no taxable income in India.
NRI or OCI Cardholders
- If total income in India is less than Rs.2,50,000 (exemption limit) during the Financial Year, there is NO REQUIREMENT to file Income Tax Return.
- You can, at your choice, file the return even if the taxable income is below the exemption limit, voluntarily
- You have the option of filing the return and claiming the TDS (withholding taxes) refund, even if the total income is less than the taxable limit
- If you have sold a property in India and incurred a loss, still you are obliged to file your income tax return
- If you have sold a property in India and made over Rs.50 Lakhs Capital Gain, then you have to file the return and declare all the Assets and Liabilities held in India.
(Note: I have not covered the Return requirements for HUF/AOP/BOI/Trusts and others)
Apart from these, an individual is allowed to voluntarily file ITR when he has no taxable income, showing NIL taxes.
One can file ITR to claim the TDS or TCS Refund. It may so happen that the Banks would have deducted TDS on Fixed or Recurring Deposits. When an individual is not having any taxable income, he can still file the return and get the TDS as a refund from the department.
Filing of Return within the Due date. The due date for filing ITR for the Financial Year 20-21 is 30th September 2021. Remember, a delay in filing ITR attracts a late filing fee u/s 234F. The taxpayers whose total income exceeds Rs.5 Lakhs, have to pay a late fee of Rs.5000 if the return is filed between 1st October to 31st December 2021 and a late fee of Rs.10,000 if the return is filed between 1st January 2022 and 31st March 2022. Also, for the taxpayers whose total income doesn’t exceed Rs.5 Lakhs, a fee of Rs.1000 is levied, if the return is filed after the due date.
The Tax department allows revising and resubmitting the tax return which is filed within the due dates. Those who file the return for FY 20-21, before 30th September 2021, can revise the return before the end of March 2022. Therefore, the earlier you file, the longer the time you get to rectify errors if any.