Who is required to file Income Tax Return?

Many of you have heard about Income Tax Return & many of you are already filing this since long by yourself or with the help of any professional. Today, in this article I will share very unusual common things which people generally don’t know about ITR filings. Also, keeping in mind the type of readers of this article, I have tried to cover the most basic concepts related with the topic.

What is Income Tax Return (ITR)?

It is a summary of the total Incomes from all the streams you have earned in a year with all the deductions you made ( Investments like PPF, FDs, EPF, Sukanya Smaridhhi or any Life insurances Health Insurances) which is to be prepared only when your Gross Total Income in a year exceeds Rs 250,000 in a financial year only.

Financial Year – In India Financial year starts with April & ends on March & Assessment Year is Year next to the financial year in which Income is assessed by the assesse.

For example – For F.Y. 2022-23( April 2022- March 2023) the A.Y. is 2023-24 (April 2023 to March 2024)

Is it compulsory to file ITR ? What if I don’t do then ?

The answer is already given in earlier paragraph that if Income exceeds Rs 250,000
in a year, you need to file it compulsory. Other additional grounds where filing of
ITR is mandatory are –

If a person is Resident or Not Ordinary Resident in India—

• Who holds any financial asset (including any financial interest in any entity) located outside India ; or
• Who is beneficiary of any asset (including any financial interest in any entity) located outside India.
• Who has signing authority in any account located outside India; or
• Who has signing authority in any account located outside India; or
• If an individual has deposited greater than 50 Lakhs in one or more saving Bank accounts ; or
• If an individual has incurred expenditure greater than Rs 2 lakhs for foreign travel ; or
• If an individual has incurred expenditure greater than Rs 1 lakhs towards electricity consumption ; or
• If total sales, Turnover or Gross receipts in the business exceeds Rs 60 lakhs, ; or
• If total sales, Turnover or Gross receipts in profession exceeds Rs 60 lakhs, ; or
• If Total Tax deducted and Collected at source (TDS/TCS) is Rs 25000 or more ( Rs 50,000 in case of resident senior citizen).

The above criteria was for the Individual persons required filing of Tax return. But
Persons other than Individuals also required to file Income tax returns regardless
of the quantum of income. Those are—

• A Company registered under Companies Act
• Partnership Firm
• Limited Liability Partnership
• One Person Company (OPC)
• Society/Trust registered under Income Tax

Now question arises what if I am not compulsorily liable to file my ITR or In my family there are persons who do not file ITR just because they don’t earn much amount in the year.

What is Income Tax Return (ITR)?

It is a summary of the total Incomes from all the streams you have earned in a year with all the deductions you made ( Investments like PPF, FDs, EPF, Sukanya Smaridhhi or any Life insurances Health Insurances) which is to be prepared only when your Gross Total Income in a year exceeds Rs 250,000 in a financial year only.

Financial Year – In India Financial year starts with April & ends on March & Assessment Year is Year next to the financial year in which Income is assessed by the assesse.

For example – For F.Y. 2022-23( April 2022- March 2023) the A.Y. is 2023-24 (April 2023 to March 2024)

• Avoid Late fees under 234F i.e. up to Rs 10,000
• Avoid Tax Notices
• For claiming Tax Refunds of TDS/TCS if any
• Carry Forward your losses to next financial year
• Helps in processing of Loans, Business loan, Home loan etc.
• Easy Credit Card
• Helps in study loan & foreign VISA
• Income Proof & address proof
• Helps in buying Term Insurance
• Builds your capital to start any business

So, now you are well aware about the importance of filing your tax returns in India even Voluntarily.

What if I don’t file or miss to file my ITR ?

Penalties for Not filing ITR

• Penalty for delay filing ITR: If you fail to file ITR by the due date, you may have to pay a penalty of up to Rs. 10,000. The penalty amount depends on the delay period and your total income. For instance, if your total income is less than Rs. 5 lakhs, the penalty amount is Rs. 1,000. If the ITR is filed after 31 December of the relevant assessment year, the penalty amount increases to Rs. 10,000.
• Penalty for Non Filing of ITRs: If a you does not file an ITR, you may have to pay a penalty of up to Rs. 10,000. This penalty is in addition to the tax liability. For instance, if the your total income is Rs. 5 lakhs, and the tax liability is Rs. 20,000, the total penalty amount will be Rs. 30,000 (Rs. 20,000 tax liability + Rs. 10,000 penalties).
• Interest charges on Outstanding Tax Amount: If a you fail to pay the tax liability, you will have to pay an interest charge of 1% per month on the outstanding tax amount. This interest is calculated from the due date of filing the ITR until the date of actual payment.