It is that time of the year when people indulge in number crunching, frantically trying to save taxes. Many out there suffer from lack of information hence invariably find themselves embroiled in tax litigations.
I aim to demystify the process of Income Tax Return filing through a series of blogs.
let us understand when is Income Tax return filing mandatory?
1.Income tax return filing for company and firm including LLP – As per Sec 139(1)These two persons are mandatorily required to file their return irrespective of their income/loss.
Income tax return filing threshold for other persons:-
2.When total income of a person (other than company and firm) exceeds the basic exemption limit or a
person in respect of whom he is assessable ,has total income exceeding basic exemption limit is mandatorily required to file return of income. (The same will be explained in the next blog)
3.As per Fourth and Fifth proviso to Sec 139(1) a. When the individual being Resident ordinarily Resident(ROR) is a beneficial owner of an asset , (including Financial Interest in an entity) located outside India or has signing authority of an account located outside India ,income tax return filing is mandatory to him/her.
Let us first understand the meaning of the terms:-
Beneficial Owner- one who enjoys the benefits of the asset while the legal ownership is in the name of someone else Example=Shares/securities will be in the name of the broker for the purpose of safety , but the true owner shall be the beneficial owner.
Financial Interest Outside India-When Mr. M , Resident Ordinarily resident has share in a company located outside India or is a partner in a firm situated outside India then it will be construed he has financial interest outside India.
Signing Authority of Bank Account located outside India- If a resident ordinarily Resident has an account in an overseas bank it will be construed He /she has signing authority of a bank outside India.
b. A Beneficiary of an asset (including Financial interest) Located outside India, such individual shall be mandatorily required to file return irrespective of the amount of income However if the beneficial owner included the income of the asset in his return of income then the beneficiary is not mandatorily required to file the return.
Let us understand who is a Beneficiary of an asset?
When someone is legally designated to receive the benefits from the financial products , such designated person shall be the beneficiary of the asset
Example- In case of Life insurance policy the person/persons to whom the benefits shall go in the event of death shall be the beneficiary of the insurance product.
.When the income of the person before claiming deductions under chapter VIA (Sec 80C to 80U ) and Deductions under sec 54 to 54GB crosses the Basic exemption limit- such persons are mandatorily required to file the return of income u/s 139(1)
The Basic Exemption Limit is the limit of income up to which no tax is leviable.
Under the old regime the basic exemption limits were as follows:
Individual less than 60 years 250000/- Individual aged 60-79(senior citizens) 300000/- Individual aged 80 or more(Super senior citizens) 500000/-
However in the new regime the threshold limit is 3 00 000/- which is the same for every individual irrespective of age.
Example-Suppose Mr. A a 25 year old has total income of 2 50 000/- After claiming Deductions u/s 80C ( deposited 150 000/-in Tax saver 5 year Fixed Deposit ) and has also paid health insurance of 25000/- each for his family and for his parents as well. Is he mandatorily required to file Income Tax Return ?
Solution-In this case his Gross Total Income is 4 50 000/-. ie Income before claiming deduction (250000+150000+50000) which crosses the Basic Exemption limit of 250000/- under the old regime and 300000/- under the new regime .
The return filing liability arises once your income before claiming the deduction exceeds the Basic Exemption Limit.
Hence regardless of the regime that he chooses he has to file the IT Return for Assessment Year 24-25.
5.As per seventh proviso to sec 139(1) income tax return filing will be mandatory if the persons other than company and firm incur the following expenditure: a. When amount exceeding 1 00 000/- is spent on electricity during the year
b. When amount exceeding 2 00 000/- on foreign travel has been spent during the year.
c.When deposit in one or more current Account exceeds 1 00 00 000/- during the year.
Apart from the above the CBDT(Central Board of Direct Taxes) has inserted Rule 12AB vide notification no.37/2022 dated 21/04/2022 which said that for the persons other than individual/firm , income tax return filing will be mandatory if any of the following conditions are fulfilled.
i. When the Turnover of the business during the year exceeds 60 00 000/-
ii .When the gross receipts exceed 1000000/- during the year
iii .When the TDS /TCS made during the year exceed 25000/- (50000/- in the case of a senior citizen)
iv. When deposited in the Savings Bank Account during the Previous year is Rs.5 00 000/- or more. Income tax return filing due dates
Persons to whom Tax Audit is not applicable—- 31st July
Tax Audit applicable- 31st October
Company- 31st October
Partner in a firm which gets its account audited -31st October
Persons to whom filing of Transfer pricing report is applicable- 30th November
Hi, I am K SEETA RAJANI, a Chartered Accountant by profession and a writer by passion. I run my own CA firm and enjoy exploring the amazing world of writing. I have translated Hindi Book Summaries into English for a leading Audio Platform and have around 1 year of experience in writing content on various niches including academic writing. Writing is a cathartic experience and I find solace in it. I believe reading is an essential part of a writer’s journey, hence I read a lot. I generally write on Taxation, Education, women empowerment, sports, and various aspects of life in general. I am excited to embark on this beautiful journey with SIJARIANS and look forward to contributing valuable articles.
