Conditions when ITR filing Becomes Compulsory

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TaxClue Team
TaxClue Team
Taxclue is an online news portal for reporting all news, articles, judgments, Circulars, orders, and notifications relating to various corporate and tax laws in India. We use the tagline ‘Simplifying Laws’. Our mission is to Simplify the Laws and make people aware of their rights and duties in relation to tax matters in order to equip them to participate in nation-building.

We know that there are very few persons are paying taxes in India as compared to other countries. As compared to the population of India of 130.00 crores the taxpaying persons are approximately 5.50. crores.

The tax rates in India are also higher than in other countries of the world. Since people are getting an education and are now ready to pay applicable taxes voluntarily to the government is a good sign for the Indian Taxation System.

We know that our taxes are the main source of our government. By paying taxes we are engaging ourselves in nation-building. Recently, the Income Tax Department has enhanced the scope of this provision and notified a few more situations wherein return filing is mandatory

In this article, we have listed all those situations which require an individual to furnish his return of income (ITR) for the Financial Year 2021-22 (The assessment Year 2022-23).

Also read: All about e-payment of direct taxes

If your total income exceeds the basic exemption limit

An individual shall file the return if his income exceeds the maximum exemption limit.

The maximum exemption limit for individuals is:

  • 2.5 lakh for an individual.
  • 3 lakhs for resident senior citizens (age 60 years or more but less than 80 years); and
  • 5 lakhs for resident super senior citizens (age 80 years or more).

The following deductions and exemptions available to an individual shall not be taken into consideration to calculate such maximum exemption limit:

  • Exemption from capital gains under section 54, 54B, 54D, 54EC, 54F, 54G, 54GA or 54GB.
  • Deduction under Section 80C to 80U.

If you have assets outside India

It is mandatory for an individual to furnish a return of income if he:

  • holds any asset (including any financial interest in any entity) located outside India (as a beneficiary or otherwise);
  • has signing authority in any account located outside India; or
  • is a beneficiary of any asset (including any financial interest in any entity) located outside India?

This provision shall apply to resident and ordinary resident individuals in India.

If you deposit more than Rs 1 crore in a bank account

An individual shall file his return if he has deposited Rs 1 crore or more in one or more current accounts maintained with a bank during the previous year.

No reference has been made for the deposit made in the current account maintained with a Post Office. Thus, if an individual is depositing more than Rs 1 crore in a current account with a post office and his income is less than the maximum exemption limit, he may not be required to furnish his return.

If you incur Rs 2 lakh on foreign travel

An individual will file his return if he has incurred more than Rs 2 lakh on travel to a foreign country, either for himself or for any other person during the previous year.

Also read: 15 tax-free incomes under income tax act 1961

If your electricity consumption is Rs 1 lakh

An individual shall file his return if he has incurred more than Rs 1 lakh on electricity consumption during the previous year.

If the turnover of your business is more than Rs 60 lakh

An individual must file his return if total sales, turnover, or gross receipt of the business exceeds Rs 60 lakh during the previous year.

If gross receipt from the profession is more than Rs 10 lakh

An individual shall file his return if the total gross receipt of the profession exceeds Rs 10 lakh during the previous year.

If TDS and TCS is Rs 25,000 or more

An Individual (age less than 60 years) is required to file his return if the aggregate amount of tax deducted at source (TDS) and tax collected at source (TCS) in his case during the previous year is Rs 25,000 or more.

If TDS and TCS is Rs 50,000 or more

The threshold limit of Rs 25,000 shall be considered as Rs. 50,000 in the case of a resident senior citizen, i.e., whose age is 60 years or more at any time during the relevant previous year.

Also Like: All about permanent account number(PAN)

If the deposit in a saving bank account is Rs 50 lakh or more

An individual shall file his return if the aggregate deposit in one or more savings bank accounts is Rs 50 lakh or more during the previous year.

If you have a loss from income from house property, capital gains, income from business and professionals

A tax return for loss is mandatory for a company or a firm. The provisions for the same are:

  • If the loss comes under the head, ‘Profits and Gains of Business and Profession’ or under ‘Capital Gains’, ITR filing is mandatory. This is in case a firm wants to carry forward this loss and offset it with the future income.
  • This option is available only if the Income Tax Return filing is done within the prescribed due date.
  • The loss can be carried forward even though the ITR is filed after the due date if the loss has occurred under the head ‘House or Residential Property.
  • If the loss is filed for returns under Section 142(1), with an exception for the loss under ‘House Property’, other losses cannot be carried forward. However, in such cases, non-offset depreciation may be carried forward.
  • If you offset the loss against another category of income in the same year, the offset is allowed even if the return is submitted after the due date.
  • Loss incurred in earlier years can also be carried forward if the returns of such losses for those years were filed with due dates and those losses were assessed.

You should always file the return of loss as it allows you to carry the loss forward, thus reducing the tax liability in the future.

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