_edited.jpg){kind=small}
Who Should File Income Tax Return, In India ?
Based on my conversations with clients at ZuperTax and friends who are salaried, I often find a common misconception: many believe that if their employer deducts income tax at the source from their salary, they're off the hook when it comes to filing their Income Tax Return (ITR). Similarly, some businessmen assume that since TDS is deducted on their transactions, filing taxes isn't necessary.
Let me clarify this—it's not quite correct.
In India, the requirement to file an ITR isn't solely determined by whether taxes are deducted at the source. While TDS (Tax Deducted at Source) ensures that some tax is collected upfront, it doesn't eliminate the need for filing your ITR if you meet certain criteria.
Who Should File Income Tax Return?
Salaried Individuals: If your gross taxable income exceeds the basic exemption limit before deductions (which is currently ₹2.5 lakh for individuals below 60 years), you are required to file an ITR. This applies even if your employer has deducted TDS.
Freelancers and Consultants: Anyone earning income through freelance work, professional fees, or consulting services must file an ITR, regardless of TDS.
Business Owners: If you run a business, whether as a sole proprietor or through a partnership, filing your ITR is mandatory, irrespective of TDS deductions.
Investors: Income from investments such as interest, dividends, or capital gains may also require you to file an ITR, depending on the amount and type of income.
NRIs and Foreign Income: Non-Resident Indians (NRIs) earning income in India or having income sourced from India are required to file an ITR under certain conditions.
Additional Situations Requiring ITR Filing
Under Section 139 of the Income Tax Act, filing an Income Tax Return (ITR) is mandatory for individuals in specific scenarios, even if their total income falls below the basic exemption limit. Here are some key situations where filing ITR is required:
High Bank Deposits: If you have deposited a total of Rs. 1 crore or more in one or more current accounts with a bank, filing an ITR is mandatory. This rule does not apply to deposits made in post office current accounts.
Large Savings Account Deposits: You must file an ITR if the total amount deposited exceeds Rs. 50 lakh in one or more savings bank accounts during the financial year.
Significant Foreign Travel Expenses: If you've spent more than Rs. 2 lakh on foreign travel for yourself or any other person during the year, filing an ITR is mandatory.
High Electricity Consumption: Exceeding Rs. 1 lakh in electricity consumption during the previous year necessitates filing an ITR.
TDS or TCS Deductions: If the total tax deducted at source (TDS) or tax collected at source (TCS) exceeds Rs. 25,000 in the previous year, filing an ITR is mandatory. For senior citizens (above 60 years), this limit is Rs. 50,000.
Business Turnover Threshold: If you are engaged in business and your total sales, turnover, or gross receipts exceed Rs. 60 lakh during the previous year, you must file an ITR.
Professional Income Threshold: Professionals earning gross receipts exceeding Rs. 10 lakh during the previous year must file an ITR.
Why Filing ITR Matters
Filing your Income Tax Return isn't just about compliance; it also offers various benefits:
Documentation for Loans and Visas: Banks often require ITRs as proof of income when processing loans. Similarly, visa authorities may request them as part of the visa application process.
Claiming Refunds: If you've paid excess taxes due to TDS or other reasons, filing an ITR allows you to claim a refund.
Avoiding Penalties: Failure to file ITR on time can attract penalties and interest on unpaid taxes.
Conclusion
Understanding when you need to file your Income Tax Return is crucial to ensuring compliance with tax laws in India. Even if your income is below the basic exemption limit, meeting any of these conditions necessitates filing your ITR.
At ZuperTax, we're here to simplify the process and help you navigate these requirements seamlessly. Contact us today to make sure your taxes are filed correctly and on time!
Filing your ITR not only fulfills legal obligations but also provides documentation for financial transactions and ensures you can claim any applicable refunds. Stay informed and stay compliant!
Comments