A number of individuals believe that their income is non taxable, so they do not need to file an Income Tax Return (ITR). According to the current provisions of income tax law, filing a tax return is mandatory for the salaried individuals with an income of over ₹2,50,000.
And an individual is meant to pay tax even if their income is below the taxable limit threshold.
“It’s mandatory to file your income tax return if your gross income is above Rs. 2,50,000 per annum. There won’t be any tax liability till Rs. 5,00,000 as there is a rebate of Rs. 12,500 for tax. So technically speaking, you must file your ITR if your income is above Rs. 2,50,000 but there won’t be any tax liability even if your income is below Rs. 5,00,000 due to rebate,” Rohit J. Gyanchandani, chartered accountant and managing director of Nandi Nivesh.
However, it is vital to know that taxpayers can file the returns even if their income is lower than ₹2.5 lakh.
READ MORE: Income Tax Filing: Here's why you must file returns before July 31
Why to file the returns?
The experts say that the consistency of filing returns is not only ideal but preferable too. If your income surpasses ₹2.5 lakh then it is mandatory to file the returns. And even if it's less than that, the income tax advisors advice individuals to file returns on time.
It helps in the following ways:
- Your income will, more likely than not, increase in the coming years, so you will have the consistency of filing returns when you are supposed to file the returns in future.
- Your salaried income may be less but other incomes such as rental or interest from bank FDs, and dividend from investments or capital gains could be there. So overall income could exceed the minimum threshold, so it is safe to file returns to minimise any possibility of tax evasion, albeit inadvertently.
- When you raise loans, be it car loan or home loan, the lender will invariably ask you to show the income tax return. So, whether you cleared your income tax dues on time or not — it makes sense to file returns on time.
Remember that there could be some unclaimed income tax refunds because you didn't declare tax-friendly investments during the year. So, these computations can generally take place at the end of the year when you know the total income, expenses and the TDS paid.
So, by ensuring to file the return would lead to refund of income tax that you have already paid.
On the basis of income criteria, you are required to file returns if your income from all the sources exceeds the amount of basic exemption limit during the financial year. The basic exemption limit for below 60 years is ₹2.50 lakh and is ₹3 lakhs for those between 60 and 80 years of age and for those who have completed 80 years can enjoy a higher exception limit of ₹5 lakh.
The returns should be filed by taxpayers within the due dates specified under Section 139(1) of the I-T Act. The due date of filing ITR is the date by which the return can be filed without having to pay a penalty or late fee. Taxpayers can also file a belated return within the due dates, which is March 31 of next year with payment of a late fee of ₹1,000, provided the gross total income is less than ₹5 lakh.