According to the data available on the Income Tax Department’s website, till 31 March 2018, about 379 million Permanent Account Numbers (PAN) were allotted to various entities. Out of these, 369 million or 97.46% PANs were allotted to individuals. However, irrespective of the fact that you have been allotted a PAN, it is not mandatory to file income tax return if your income is less than the basic exemption limit. But it is mandatory to have a PAN card to file an ITR. In FY 2017-18, about 67 million returns were filed, which is about 18% of the total PAN allotted.
When is it mandatory to file ITR if you have a PAN?
It is mandatory to file ITR if the gross total income of an assessee, be it an individual, Hindu Undivided Family, an association of person (AOP) or a Body of individual (BOI), exceeds the maximum amount not chargeable to tax. Gross total income of a person is the income without considering any exemptions and deductions. The minimum exemption limit for the current year 2018-19 is up to Rs 2.5 lakh for an individual below 60 years. It is Rs 3 lakhs for an individual between 61 and 80 years of age, and Rs 5 lakh in case of individuals who are above 80 years of age.
For example, suppose you are a 27-year old person and earned Rs 3.5 lakh during the last financial year 2017-18. Also, you invested Rs 1.5 lakh during the year in various chapter VI A instruments like Public Provident Fund and equity-linked savings schemes and life insurance premiums which qualify for deductions under section 80C of the Income Tax Act, 1961. Even if your income after deduction is less than Rs 2.5 lakh, filing the tax return becomes mandatory for you.
However, for a company or a firm, it is mandatory to file a return irrespective of income or loss. Also, in some cases, even if the income of an individual is less than the taxable income, she/he might have to file a return. For instance, if an assessee has a bank account or any asset or any financial interest in any entity located abroad, then she/he must file a return and also furnish details of such accounts, assets and financial interest in the tax returns. This provision has been introduced in the Act in order to keep a track of overseas assets and curb unlawful gains.
The due date of filing your tax return is just three weeks away. Furnishing your return does not just make you a law-abiding citizen, but also gives you multiple benefits. We recommend you to file your return immediately to avoid last-minute commotions.
Happy ITR filing!