Section 139 of the Income Tax Act governs the filing of a return of income. A common understanding is that the obligation to file an income tax return (ITR) arises if an individual earns income on which tax has been deducted.
This is not entirely true. Section 139 lists certain situations wherein return filing by an individual is mandatory even if no tax has been deducted from his income or even if he does not earn any income.
Recently, the Income Tax Department has enhanced the scope of this provision and notified a few more situations wherein return filing is mandatory.
In this write-up, we have listed all those situations which require an individual to furnish his return of income for the Financial Year 2021-22 (Assessment Year 2022-23).
1) If your total income exceeds the basic exemption limit
An individual shall file the return if his income exceeds the maximum exemption limit. The maximum exemption limit for individuals is:
⦁ Rs. 2.5 lakh for an individual;
⦁ Rs. 3 lakh for resident senior citizen (age 60 years or more but less than 80 years); and
⦁ Rs. 5 lakh for resident super senior Citizen (age 80 years or more).
The following deductions and exemptions available to an individual shall not be taken into consideration to calculate such maximum exemption limit:
⦁ Exemption from capital gains under section 54, 54B, 54D, 54EC, 54F, 54G, 54GA or 54GB.
⦁ Deduction under Section 80C to 80U.
For example, Mr. A (aged 50) has sold a residential house and earned a long-term capital gain of Rs 10 lakh. He invested such capital gains and claimed exemption under Section 54. In this case, the total income of Mr. A before claiming exemption is Rs 10 lakh which exceeds the maximum exemption limit. Thus, filing of return is mandatory.
This provision shall apply to both resident and non-resident individuals.
2) If you have assets outside India
It is mandatory for an individual to furnish a return of income if he:
⦁ holds any asset (including any financial interest in any entity) located outside India (as a beneficiary or otherwise);
⦁ has signing authority in any account located outside India; or
⦁ is a beneficiary of any asset (including any financial interest in any entity) located outside India.
This provision shall apply to resident and ordinary resident individuals in India.
3) If you deposit more than Rs 1 crore in a bank account
An individual shall file his return if he has deposited Rs 1 crore or more in one or more current accounts maintained with a bank during the previous year.
No reference has been made for the deposit made in the current account maintained with a Post Office. Thus, if an individual is depositing more than Rs 1 crore in a current account with a post office and his income is less than the maximum exemption limit, he may not be required to furnish his return.
4) If you incur Rs 2 lakh on foreign travel
An individual will file his return if he has incurred more than Rs 2 lakh on travel to a foreign country, either for himself or for any other person during the previous year.
5) If your electricity consumption is Rs 1 lakh
An individual shall file his return if he has incurred more than Rs 1 lakh on electricity consumption during the previous year.
6) If turnover of your business is more than Rs 60 lakh
An individual must file his return if total sales, turnover, or gross receipt of the business exceeds Rs 60 lakh during the previous year.
7) If gross receipt from profession is more than Rs 10 lakh
An individual shall file his return if the total gross receipt of the profession exceeds Rs 10 lakh during the previous year.
8) If TDS and TCS is Rs 25,000 or more
An Individual (age less than 60 years) is required to file his return if the aggregate amount of tax deducted at source (TDS) and tax collected at source (TCS) in his case during the previous year is Rs 25,000 or more.
9) If TDS and TCS is Rs 50,000 or more
The threshold limit of Rs 25,000 shall be considered as Rs. 50,000 in the case of resident senior citizen, i.e., whose age is 60 years or more at any time during the relevant previous year.
10) If deposit in a saving bank account is Rs 50 lakh or more
An individual shall file his return if the aggregate deposit in one or more savings bank accounts is Rs 50 lakh or more during the previous year.
(By CA Naveen Wadhwa, DGM, Taxmann and CA Rahul Singh, Manager, Taxman)