Should you file income tax return if your income is not taxable?

By: |
December 30, 2020 10:50 AM

If a person is also required to file his/her return of income if the income does not exceed the taxable limit? Find out.

As per the tax provisions, filing income tax returns is mandatory where the gross total income of an individual is more than Rs 2,50,000.

It is common knowledge that every Indian citizen whose gross total income exceeds the taxable limit in a financial year is required to file his/her income tax return (ITR). However, sometimes some people wonder if a person is also required to file his/her return of income if the income does not exceed the taxable limit? And, if yes, then in what circumstances?

Tax experts say, as per the tax provisions, filing income tax returns is mandatory where the gross total income of an individual is more than Rs 2,50,000. “One needs to take cognizance of the fact that the reference here is made to the gross total income which would mean the income before any deductions under chapter VI-A. Thus, a person having his gross total income above Rs 250,000 needs to file a tax return even if ultimately he may not have any tax payable or may even have a refund,” says Aarti Raote, Partner, Deloitte India.

By law an individual who may not have taxable income is also mandated to file a tax return if he meets any of the below conditions:

(i) The individual has deposited an aggregate amount exceeding Rs 1 crore in one or more current bank accounts with any bank; or

(ii) The individual has incurred expenditure of an aggregate amount exceeding Rs 2 lakh for himself or any other person for travel to a foreign country; or

(iii) The individual has incurred expenditure of an amount or aggregate of the amounts exceeding Rs 1 lakh towards consumption of electricity.

Apart from this, any individual who qualifies as “resident and ordinarily resident” in India during a financial year is required to file a tax return even if the gross total income is below the basic exemption limit if he holds any assets, bank accounts, signing authority in any account or beneficiary interest in any entity outside India. Such individual is required to disclose this in his tax return.

Separately, “individuals claiming relief under the DTAA provisions, claiming refund of excess taxes, having carry forward losses need to file tax returns to establish their claims and obtain relief. An individual can also choose to file a tax return even if not mandated to ensure continuity in his tax records which will help provide necessary documentation for obtaining loan, visa etc,” informs Raote.

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