ET OnlineAccording to income tax laws, you have to file an income tax return if your gross taxable income goes over the basic exemption limit. The basic exemption limit depends on the tax regime you choose. Under the new tax regime, the basic exemption limit is set at Rs 3 lakh, regardless of the taxpayer's status. On the other hand, the old tax regime has different basic exemption limits for various groups: for the general public, it's Rs 2.5 lakh; for senior citizens, it's Rs 3 lakh; and for super senior citizens, it's Rs 5 lakh.
That said, there are specific cases outlined in the Income Tax Act, 1961, where you still need to file your ITR even if your gross taxable income is below the basic exemption limit.
Also Read | Taxable income below Rs 7 lakh: Will you pay zero tax if income includes LTCG and STCG?
ET Wealth spoke to Dr Suresh Surana, a practising chartered accountant, who highlighted the situations where ITR filing is mandatory even if the gross taxable income is below the basic exemption limit.
1. Spending Rs 2 lakh and more for foreign travel in a financial year: Income tax laws make ITR filing mandatory if the resident individual has spent Rs 2 lakh or more (in one go or in aggregate in a financial year) on himself/herself or any other person travelling to a foreign country.
2. Holding foreign shares, assets or foreign income: These days, a lot of taxpayers are investing their money directly into the shares of foreign companies. Because of this, they need to file an income tax return, even if their taxable income is under the basic exemption limit. It's important for taxpayers to remember that any dividends they receive from foreign shares are taxable for them. They have to report these dividends as well as the foreign assets in their ITR. This includes details about foreign shares, securities, etc, and any foreign custodian accounts they might have.
According to Section 139(1) of the Income-tax Act, ITR filing is mandatory if a resident individual owns assets such as shares, bonds of foreign companies; a house in foreign countries; or earns income like dividends, interest or rent from foreign countries or has signing authority in any foreign bank account outside India.
Surana says: "If the individual invests his money in foreign shares in his parent's name as the parent's income is below the basic exemption limit, then ITR filing becomes mandatory for the parent."
Also Read | ITR filing deadline is not same for everyone: Check last date for salaried, professionals
3. TDS or TCS of Rs 25,000 has been deducted or collected: In April 2022, the Central Board of Direct Taxes (CBDT) made ITR filing mandatory if the TDS or TCS of Rs 25,000 or more has been deducted or collected from an individual. This means that if TDS or TCS is deducted or collected in FY 2024-25 of Rs 25,000 or more, then filing of the ITR is mandatory.
4. Mandatory ITR Filing Criteria Based on Turnover / Gross Receipts: A person must file an ITR for a particular financial year if they exceed any of the following financial thresholds during that year:
a. In case of taxpayer engaged in business: If the total sales, turnover, or gross receipts from the business exceed Rs 60 lakh.
b. In case of taxpayer engaged in profession: If the total gross receipts from the profession exceeds Rs 10 lakh.
5. Paid electricity bill of Rs 1 lakh in financial year: Under the income tax rules, ITR filing is mandatory if a taxpayer has paid electricity bill of Rs 1 lakh or more in a financial year. The electricity bill can be paid either as a single payment or on an aggregate basis throughout the year.
6. If you have to claim an income tax refund: ITR filing is mandatory if a taxpayer has to claim an income tax refund. Hence, irrespective of whether you have gross taxable income below/above the basic exemption limit.
Once the ITR is filed, the income tax department matches the information filed in the ITR with the information available. If the details and tax calculations are correct, the income tax refund is issued.
7. Deposited Rs 1 crore in current account or Rs 50 lakh in savings account: Section 139 of the Income Tax Act mandates that if any taxpayer including a self-employed individual with a current bank account has deposited Rs 1 crore or more or Rs 50 lakh or more in a savings account in a financial year (on a single deposit or an aggregate deposit), then ITR filing is mandatory.
8. Claiming LTCG tax exemption: The income tax rules allow exemption on long-term capital gains (LTCG) tax under certain conditions.
Surana says, "ITR filing is mandatory if an individual's gross total income exceeds the exemption limit before claiming LTCG tax exemption. Under the Income-tax Act, an individual can claim LTCG tax exemption through sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA or 54GB."
That said, there are specific cases outlined in the Income Tax Act, 1961, where you still need to file your ITR even if your gross taxable income is below the basic exemption limit.
Also Read | Taxable income below Rs 7 lakh: Will you pay zero tax if income includes LTCG and STCG?
ET Wealth spoke to Dr Suresh Surana, a practising chartered accountant, who highlighted the situations where ITR filing is mandatory even if the gross taxable income is below the basic exemption limit.
ITR filing mandatory even if gross taxable income is below the basic exemption limit
Here are the situations where ITR filing is mandatory even if the total taxable income is below the basic exemption limit.1. Spending Rs 2 lakh and more for foreign travel in a financial year: Income tax laws make ITR filing mandatory if the resident individual has spent Rs 2 lakh or more (in one go or in aggregate in a financial year) on himself/herself or any other person travelling to a foreign country.
2. Holding foreign shares, assets or foreign income: These days, a lot of taxpayers are investing their money directly into the shares of foreign companies. Because of this, they need to file an income tax return, even if their taxable income is under the basic exemption limit. It's important for taxpayers to remember that any dividends they receive from foreign shares are taxable for them. They have to report these dividends as well as the foreign assets in their ITR. This includes details about foreign shares, securities, etc, and any foreign custodian accounts they might have.
According to Section 139(1) of the Income-tax Act, ITR filing is mandatory if a resident individual owns assets such as shares, bonds of foreign companies; a house in foreign countries; or earns income like dividends, interest or rent from foreign countries or has signing authority in any foreign bank account outside India.
Surana says: "If the individual invests his money in foreign shares in his parent's name as the parent's income is below the basic exemption limit, then ITR filing becomes mandatory for the parent."
Also Read | ITR filing deadline is not same for everyone: Check last date for salaried, professionals
3. TDS or TCS of Rs 25,000 has been deducted or collected: In April 2022, the Central Board of Direct Taxes (CBDT) made ITR filing mandatory if the TDS or TCS of Rs 25,000 or more has been deducted or collected from an individual. This means that if TDS or TCS is deducted or collected in FY 2024-25 of Rs 25,000 or more, then filing of the ITR is mandatory.
4. Mandatory ITR Filing Criteria Based on Turnover / Gross Receipts: A person must file an ITR for a particular financial year if they exceed any of the following financial thresholds during that year:
a. In case of taxpayer engaged in business: If the total sales, turnover, or gross receipts from the business exceed Rs 60 lakh.
b. In case of taxpayer engaged in profession: If the total gross receipts from the profession exceeds Rs 10 lakh.
5. Paid electricity bill of Rs 1 lakh in financial year: Under the income tax rules, ITR filing is mandatory if a taxpayer has paid electricity bill of Rs 1 lakh or more in a financial year. The electricity bill can be paid either as a single payment or on an aggregate basis throughout the year.
6. If you have to claim an income tax refund: ITR filing is mandatory if a taxpayer has to claim an income tax refund. Hence, irrespective of whether you have gross taxable income below/above the basic exemption limit.
Once the ITR is filed, the income tax department matches the information filed in the ITR with the information available. If the details and tax calculations are correct, the income tax refund is issued.
7. Deposited Rs 1 crore in current account or Rs 50 lakh in savings account: Section 139 of the Income Tax Act mandates that if any taxpayer including a self-employed individual with a current bank account has deposited Rs 1 crore or more or Rs 50 lakh or more in a savings account in a financial year (on a single deposit or an aggregate deposit), then ITR filing is mandatory.
8. Claiming LTCG tax exemption: The income tax rules allow exemption on long-term capital gains (LTCG) tax under certain conditions.
Surana says, "ITR filing is mandatory if an individual's gross total income exceeds the exemption limit before claiming LTCG tax exemption. Under the Income-tax Act, an individual can claim LTCG tax exemption through sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA or 54GB."
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