Who is required to file an income tax return?
Many salaried as well as retired individuals are under the impression that as tax has been deducted from their income; they do not have to file their ITR. Filing of an ITR is a distinct and different responsibility from payment of taxes on your income and both have to be discharged separately. So in order to clear doubts around this subject, let us discuss as to who is required to file an ITR? Please note this discussion is restricted to law applicable to individuals only.
Income criteria for Liability to file ITR
As per the income tax laws, you have to file your ITR if the aggregate of all your income: called gross total income, exceeds the basic exemption limit before various deductions available for various investments and expenses under chapter VIA, which comprises mainly Section 80C, 80 CCD, 80D, 80TTA, 80 TTB etc. These deductions relate mainly to life insurance premium and health insurance premium, contribution towards EPF, PPF and NPS accounts, interest from banks, tuition fee for children, repayment of home loan etc.
For example in some of the cases the gross total income may exceed the basic exemption limit, making you liable for filing of ITR but due to various deductions, the taxable income may come down below 2.50 lakh and thus no liability to pay any tax.
Likewise in case taxable income is above 2.50 lakh but below 5 lakh and by virtue of rebate under section 87A, you may not have to pay any tax still you will have to file your ITR. While arriving at the figure of taxable income you have to include certain exempt incomes like, exemption from long term capital gains under Section 54, 54EC, 54F etc.
Non income criteria for Requirement to file ITR
In addition to the level of income, the tax laws also prescribe certain situation under which you have to file an ITR even if you do not have any taxable income for the year. First such condition relates to having interest in asset outside India or having signing authority in respect of any account outside India by resident tax payers. The asset need not necessarily be immovable or even if you are a signatory in a bank outside India irrespective of balance in the account, you have to file an ITR here in India. So in case you had been outside India for a brief spell and came back to India without closing the bank account opened there, you are covered here.
Three more conditions have become applicable from the current financial year 2019-2020. The first such condition is that in case you have deposited more than one crore in one or more current bank account during the year. The deposit need not necessarily be in cash so even if the deposits which have come through banking channel exceed 1 crore for all your current accounts taken together, you have to file an ITR.
I am sure with the above discussion most of you are clear about whether one has to file his ITR or not. So get ready to file it by 30 th November 2020 in case not already filed.
Source : Live Mint