Money
Did you file your income tax return?
Summary
- An ITR must be filed when total income exceeds basic exemption limit or under specific conditions, such as high deposits, significant spending, among others.
- Even if not mandatory, filing an ITR is advised to claim refunds, carry forward losses, avoid issues with tax authorities, especially for NRIs
NEW DELHI : As the tax filing season kicks off again, many individuals are questioning whether they need to file their income tax return (ITR) for financial year 2024 (FY24). This uncertainty often arises because employers have already deducted tax on salaries or banks have deducted tax at source (TDS) on interest or pensions. Others may believe their income is too low to require filing. However, these assumptions need re-evaluation.
Mandatory filing of returns
Both resident and non-resident individuals must file an ITR in India if their total income in a fiscal year exceeds the basic exemption limit.
“Total income" refers to taxable income before applying tax exemptions on capital gains and various deductions for insurance, investments, home loans and contributions to the National Pension Scheme (NPS).
For FY24, the basic exemption limit is ₹2.5 lakh under the old tax regime, ₹3 lakh for resident senior citizens and ₹5 lakh for resident super-senior citizens. Under the new regime, the exemption limit is ₹3 lakh, regardless of age.
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Individual taxpayers are also required to file an ITR in a year they:
- Have deposited ₹50 lakh or more in savings bank accounts.
- Have deposited more than ₹1 crore in one or more current accounts in a bank, including cooperative banks.
- Have spent more than ₹2 lakh on foreign travel for themselves or others.
- Have spent more than ₹1 lakh on electricity consumption.
- Are engaged in any business with total sales/turnover exceeding ₹60 lakh.
- Are engaged in any profession with gross receipts exceeding ₹10 lakh.
- Have been subjected to TDS or tax collected at source (TCS) of ₹25,000 or more. For senior citizens aged 60 years and above, the threshold is ₹50,000 or more.
More Here: How companies can help their employees save ₹1 lakh in taxes
Additionally, a resident individual, other than not ordinarily resident, must file an ITR if they hold any foreign assets, have signing authority in any foreign account, or are beneficiaries of any foreign assets.
Optional filing
Even if none of the above conditions apply, it is advisable to file an ITR for several reasons:
- To claim a refund of TDS/TCS.
- To carry forward losses to the next year.
- To maintain continuity of filing and keep Indian tax records updated.
- As a record of income, which may be required for loans, subsidies, visas, etc.
- To declare exempt income or gifts, which can be useful in case of queries from tax authorities.
There have been numerous instances where non-resident Indians (NRIs) received notices from income tax authorities for interest earned on non-resident external (NRE) account deposits in India. Although this interest is exempt, authorities have issued notices due to the lack of required data to determine the taxability of such interest. Regular filing of ITRs could have prevented these notices, even if the taxable income in India is below the exemption limit.
The deadline for filing ITR for the current assessment year is 31 July. However, for partners in firms subject to audit or those in business/professions subject to audit, the deadline is 31 October.
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After filing the ITR, ensure its verification within 30 days through net banking, Aadhaar-OTP, a hard copy of the signed ITR acknowledgment, electronic verification code or digital signature. Without verification, the ITR will not be considered valid. If verification is done after 30 days, the date of verification will be treated as the date of filing, potentially resulting in late filing consequences.
Prakash Hegde is a chartered accountant at Acer Tax & Corporate Services Llp, Bengaluru.
