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Business News/ Money / Personal Finance/  Income tax return filing: Do you have to file an ITR when you do not have any tax liability?

Income tax return filing: Do you have to file an ITR when you do not have any tax liability?

Confusion persists among taxpayers about who needs to file an income tax return (ITR). Even if tax has been deducted at source, individuals receiving income from all sources above the basic exemption limit must file their ITR

A TRP, as per official rates, can charge a maximum of Rs250 for filing one ITR. Photo: iStockPremium
A TRP, as per official rates, can charge a maximum of Rs250 for filing one ITR. Photo: iStock

There is confusion in the minds of many persons as regards who has to file an ITR. Few salaried as well as senior citizens receiving interest income carry an impression that as tax has already been deducted at source they do not have to file any ITR. This is not correct. The obligation to file an ITR is a distinct and different from the obligation to pay proper tax and both are required to be discharged separately. Let us discuss the legal requirement as to who is required to file an ITR. This discussion is restricted to the law applicable to individuals only.

Requirement based on Income of the person

You are mandatorily required to file your ITR if the aggregate of your income from all sources is more than the threshold of the basic exemption limit. The income to be considered for this purpose is the income before various deductions available under Chapter VIA, which comprises mainly Section 80C, 80 CCD, 80D, 80 G, 80TTA, 80 TTB etc. These deductions relate mainly to life insurance premiums and health insurance premiums, contributions towards

EPF, PPF, and NPS accounts, interest from banks, tuition fees for children, repayment of home loans etc. While arriving at the amount of taxable income you have to include certain exempt incomes like, exemption from long-term capital gains under Section 54, 54EC, 54F, etc.

The threshold of basic exemption is 2.50 lakhs for those below 60 years. It is 3 lakhs and 5 lakhs respectively for those resident individuals between 60 and 80 and those over 80 years. It may happen that due to various deductions and rebates, you may not have any tax liability but you may still have to file your ITR if the sum of all taxable income exceeds the threshold prescribed. For example, if your income is below 5 lakhs and does not include any long-term capital gains on listed shares and equity funds. due to rebates available under section 87A, you will not have any tax liability but have to still file an ITR.

Non-income criteria for Requirement to file ITR

The tax laws also require you to file your ITR based if you satisfy certain non-income criteria even if you do not have any taxable income discussed as under:

If you are a resident, you have to file an ITR if you have a beneficial interest in any foreign asset whether movable or immovable, or have signing authority in respect of any account maintained outside India. So you have to file your ITR in case you had gone outside India where you had opened a bank account have come back to India without closing it even leaving a very negligible balance in the account if you are otherwise not required to file the ITR. Likewise, those who have invested in shares, bonds, or mutual fund units of foreign companies are equally covered here. Those employees having ESOPs of holding company of their Indian employer are covered here so are covered by the NRIs, who have come back to India to spend the rest of their life in India once they become residents under tax laws.

The law also requires you to file an ITR if you have made deposits of more than one Crore rupees in all current accounts taken together or more than 50 lakh rupees in all saving accounts taken together. The deposit to be considered for this purpose is all the deposits made in the bank account whether by cash or to otherwise.

Likewise, you have to file an ITR irrespective of your income if during the year your turnover exceeds sixty lakhs in case engaged in business and ten lakh rupees if engaged in a profession.

The law also requires you to file your ITR if the total tax deducted from your income during the year exceeds 25,000/- rupees. For senior citizens, a higher threshold of 50,000/- rupees is prescribed.

In case you have made a payment of more than two lakhs for foreign travel or have incurred expenses on electricity over one lakh in the previous year, the law obligates you to file an ITR. Please note that even if you pay for foreign travel for a person who is not your family member, you are still covered here. Likewise, it is not necessary that the electricity connection should be in your name. So if you are using rented premises and have paid more than one lakh for electricity charges during the year, you are covered here.

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 31 July 2023 in case not already been filed.

Balwant Jain is a tax and investment expert and can be reached at and @jainbalwant on Twitter.

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Updated: 01 Jun 2023, 12:07 PM IST
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