Who is required to file Income Tax Return (ITR)?

As we are approaching the end of the financial year, there is a ruckus all around about the tax saving investments and their declarations to the employer. There are various investment avenues like ELSS, PPF, PF, Life Insurance, Health Insurance etc. which you can consider before the year end for tax saving.

From FY 2020-21 onwards, there are two different tax regimes in place for individuals with different tax structures. Going forward, we will understand these two regimes in detail.

In today’s blog, let us try and understand whether we are required to file the annual income tax return.

Firstly, Income Tax return filing is mandatory an individual whose annual income is more than the basic exemption limit of Rs 2.5 lakh. The basic exemption limit for senior citizens (60 years onwards and less than 80 years) is Rs 3 lakh, and for super senior citizens is Rs 5 lakh if the old tax regime (scheme) is opted. Under new tax scheme however, basic exemption limit is Rs. 3 lakhs for every individual.

Now, even though you do not fulfil the above parameter, there are some additional parameters which necessitates you to file annual income tax return.

1. Deposited an amount or aggregate of the amounts exceeding Rs. 1 crore in a Current account maintained with any bank (including co-operative bank accounts). This is applicable even if you split your deposits to multiple current accounts.; or

2. Incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or

3. Incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or

4. holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or

5. is a beneficiary of any asset (including any financial interest in any entity) located outside India,

6. If any person who has sustained a loss in any previous year under the head "Profits and gains of business or profession" or under the head "Capital gains" and claims that the loss or any part thereof should be carried forward

Now, if you fall within any of the above parameters, you will be required to file Annual Income tax return. It is also necessary to file income tax return to obtain refund of any TDS deducted.

Now, you may ask, what if I don’t file my income tax return, in such cases you could face a hard time getting a loan, visa approval, etc. Also, the major consequences of late filing of ITR is that you will have to pay interest along with penalty.

To understand more about such interesting concepts, stay tuned.

Until next time !!!