The government has issued a notification under Notification No. 37/2022 dated April 21, 2022 which specifies additional conditions for filing tax returns if an individual’s income is below the basic exemption ceiling.
The conditions are specified below:
● The company’s total sales/turnover/gross revenue in the financial year exceeds Rs 60 lakh.
● Total business gross receipts exceed Rs 10 lakh in the financial year.
● The total TDS and TCS during the financial year is Rs 25,000 or more (in case of elderly, an increased limit of Rs 50,000 will be applicable).
● Total deposits in one or more savings bank accounts is Rs 50 lakh or more during the financial year.
“The law already contains certain conditions under which you are required to file a tax return even if the income is below the threshold,” says Archit Gupta, founder and CEO of Cleartax, a tax portal. The conditions are as follows:
● If you have deposited an amount, or if the whole amount is more than Rs 1 crore in one or more current accounts maintained with a bank or a cooperative bank.
● If you have incurred total expenses greater than Rs 2 lakh for yourself or any other person traveling to a foreign country.
● If you have incurred overall expenses above Rs 1 lakh for payment of electricity bill.
Other scenarios where it is mandatory to file an ITR
Under the Income Tax Act, it is mandatory to file an ITR in India under the following circumstances
● Your total gross income (before allowing any deduction under sections 80C to 80U) exceeds Rs 2.5 lakh in the financial year 2020-21. This limit is Rs 3 lakh for seniors (aged over 60 but under 80) or Rs 5 lakh for super seniors (aged over 80).
● You are a corporation or a business, whether or not you have realized an income or a loss during the financial year.
● You want to claim an income tax refund.
● You want to post a loss under an income item.
● Filing a tax return is mandatory if you are a resident individual and hold any asset or financial interest in an entity outside India. (Not applicable to NRI or RNOR).
● If you are a resident and authorized signatory of a foreign account. (Not applicable to NRI or RNOR).
● You are required to file an ITR when you receive income from property held in a trust for charitable or religious purposes, or from a political party or research association, press, an educational or medical institution, a trade union, a non-profit university or educational institution, a hospital, an infrastructure debt fund, any authority, body or trust.
● If you are a foreign company benefiting from the advantages of a treaty on a transaction in India.
● A proof of return deposit may also be required at the time of loan or visa application.
ITR deposit for NRIs
Says Gupta: “Anyone, NRI or not, whose income exceeds Rs 2.5 lakh (for the financial year 2020-21) is required to file an ITR in India. The limit is the same for all individuals; there is no upper threshold for senior or super-senior citizens. Please note that for an NRI, income earned or accrued in India is taxable in India.
There is, however, another exception for NRI taxpayers. Unlike the case of resident Indians, if there is a long-term or short-term capital gain, non-residents are not eligible to benefit from the basic exemption limit. Therefore, if the capital gains exceed Rs 2.5 lakh, the NRI is required to deposit the RTI.
Why e-File ITR
“A considerable number of declarations are transmitted electronically and, gradually, the IT department hopes to put all declarations online. Filing the ITR online is mandatory for all registered taxpayers with taxable income. However, paper returns can be filed by those who are over 80 and have no income from a regular business or profession,” Gupta adds.
If you get away with postponing this until the due date, there are legal consequences for filing late.
Penalties for non-filing of the ITR
Under Section 271F, the valuation officer could impose a penalty of Rs 5,000 when you have failed to file your return. (Applicable until fiscal year 2016-17).
Penalty for late filing from fiscal year 2017-2018
As of the 2017-2018 fiscal year, the penalties for not filing a tax return are as follows:
• A penalty of Rs 5,000 is applicable if the declaration for the financial year 2018-19 is filed after the due date but before December 31, 2019.
• A penalty of Rs 10,000 is applicable if the declaration for the financial year 2018-19 is filed after December 31, 2019, but before March 31, 2020.
Note: The penalty is limited to Rs 1,000 for those whose income does not exceed Rs 5 lakh. These provisions are covered by a new section 234F.
Provisions relating to sanctions from the financial year 2020-21
From the 2020-21 financial year, the maximum amount payable in the event of late filing of the declaration is reduced to Rs 5,000.
Therefore, from the financial year 2020-21, if the taxpayer files the return after the due date, a penalty of up to Rs 5,000 will be paid. However, there is no change in the amount of penalty for taxpayers whose income is less than Rs 5 lakh i.e. the penalty is still Rs 1,000.