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Know Your Taxes – KYT

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Who should file ITR and When? – These questions have been hitting our inbox for some time. There are many misconceptions among taxpayers regarding ITR filings. We have tried to clear such misconceptions in this article.

But before getting into the topic “Who should file ITR? And When?”, let us try to understand the benefits of filing income tax return. Let us see some of the benefits:

Benefits of filing ITR:

  1. Income Tax Return (ITR) is a well-accepted proof of your income and wealth
  2. Loan/credit card can be approved easily based on your income
  3. Quicker visa approvals
  4. Timely filing of return allows claiming losses incurred if any on account of capital gains, business/profession, and house property
  5. Can claim a refund of excess TDS deducted if any 
  6. To comply with the land of the law and avoid interest and penalties.

Who should file ITR:

  • Every individual based on his/her age and whose total income is more than the specified limit as per the below table must file the income tax return every year with the department.
Age limitTotal income threshold limit
Below 60 yearsMore than Rs. 2,50,000/-
Above 60 but below 80 yearsMore than Rs. 3,00,000/-
Above 80 yearsMore than Rs. 5,00,000/-
Individual taxpayers – income thresholds

For calculating the total income threshold during the financial year, one should consider all the sources of income and exclude the deductions relating to capital gains and chapter- VIA deductions such as LIC, tuition fee, PPF contribution, repayment of housing loan and etc. However, section 10 exemptions can be excluded like agricultural income, share of the profit from partnership firm, income from mutual funds, etc.

However, in the following cases it is mandatory for an individual to file tax returns even his/her income is below taxable income;

  • If he/she deposits more than one crore rupees in cash during the financial year in one or more current accounts maintained with a banking company or a co-operative bank.
  • If he/she incurs expenditure which is more than Rs. 2,00,000/- towards foreign travel during the financial year.
  • If he/she incurs expenditure which is more than Rs. 1,00,000/- towards the consumption of electricity during the financial year.
  • Resident individual who is a beneficial owner or otherwise, who holds any asset (including financial interest in any entity) which is located outside India
  • Resident individual who is a signing authority in any account located outside India.
  • Resident individual who is a beneficiary of any asset (including financial interest in any entity) which is located outside India.
  • Non-resident individual is liable to file the return only when he earns income in India which is more than the specified threshold limit as given below;
Age limitTotal income threshold limit
Below 60 yearsMore than Rs. 2,50,000/-
Above 60 but below 80 yearsMore than Rs. 3,00,000/-
Above 80 yearsMore than Rs. 5,00,000/-
Non-resident income thresholds

Let us see this with some illustrations for better understanding:

  • Mr. Ram, a resident individual aged 52 years has earned rental income of Rs. 2,40,000/- during the year and he does not have any other income other than rental income during the financial year. With the accumulated savings, he travelled to US along with family. He spent an amount of Rs. 4,00,000/- towards travel expenditure. Is Mr. Ram liable to file the Income Tax Return?

Ans:  Yes, Mr. Ram is liable to file income tax returns. Though his total income is below Rs. 2,50,000/- he is liable as he spent more than Rs. 2,00,000/- towards foreign travel. 

  • Mr. Gopal is a resident individual whose age is 65 years earned agriculture income of Rs. 10,00,000/- during the year and he does not have any other income during the year. Is Mr. Gopal liable to file the Income Tax Return?

Ans:   No, Mr. Gopal is having only agricultural income, which is excluded from the total income threshold, hence he is not liable to file the income tax return.

  • Mr. Varma is a non-resident individual whose age is 45 years & has earned Rs. 2,30,000/- from the house property situated in India and earned salary income of Rs. 35,00,000/- from a US entity during the year. Is Mr. Varma liable to file the income tax return?

Ans:  No, as Mr. Varma is a non-resident and his income earned in India is less than Rs. 2,50,000/-, he is not liable to file the income tax return.

When ? ITR – Due Dates

  1. Every individual who is having income from business/profession and subject to tax audit, the due date for filing income tax return is 31st October.
  • In any other case (other than tax audit), the due date for filing of income tax returns is 31st July.

However, due to COVID-19, for all the cases due date for filing of income tax returns has been extended to 30/11/2020 for the financial year 2019-20.

Consequences for non-filing/late filing of IT return:

Late filing of IT return

Belated return can be filed till 31st March of next financial year. However late filing fee will be levied as per the below table.

DateLate filing fee if total income is below Rs. 5,00,000/-Late filing fee if total income is more than Rs. 5,00,000/-
Before 31st DecemberRs. 1,000/-Rs. 5,000/-
After 31st December but before 31st MarchRs. 1,000/-Rs. 10,000/-
Penalties for late filing
  • Along with the late filing fee, if you are having tax liability then, interest under section 234A will be levied at the rate of 1% p.m.
  • Apart from the above late filing fee and interest, business loss and capital losses cannot be carried forward.

Non-filing of IT return

If you fail to furnish the IT return before 31st March, then the consequences are as follows:

  • Fee (penalty) anyway will be levied up to Rs. 10,000/- based on total income.
  • If you are having taxable income and if you fail to file the return, that can be treated as concealment of income and the penalties will be higher and it may go up to 300% of your tax liability along with interest.
  • You cannot claim the refund of taxes (excess TDS deducted, if any).
  • You cannot carry forward the losses.

Also read Selection of Correct ITR From & More Pointers in filing IT Returns