The last date for filing ITR for the current assessment year is July 31, 2024, for individuals who are not required to undergo income tax audit for FY 2023-24 (AY 2024-25). Apart from income, there are some additional factors that make filing ITR mandatory.
Under Section 87A of the Income Tax Act, 1961, you are eligible for tax exemption if your net taxable income is within Rs 5 lakh.Old tax regime) or Rs 7 lakh (New tax regime,
The maximum tax exemption is Rs 12,500 under the old tax regime and Rs 25,000 under the new tax regime. As a result, if your income falls within the specified levels, you are not required to pay any income tax. Nevertheless, according to a report by ET, filing ITR is necessary even if your tax liability becomes zero due to tax exemptions.
Sudhir Kaushik, co-founder and CEO, Taxspanner.com, said, “There is a general misconception among taxpayers that if tax is not payable, then filing of ITR is not mandatory.”
According to Kaushik, if your Gross Total IncomeExceeds the basic exemption limit, before deductions under Chapter VI (Section 80C, 80D, etc).
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The basic exemption limits under the old tax regime for FY 2023-24 (FY 2024-25) are as follows:
* Rs 2.5 lakh for individuals below 60 years of age
* Rs 3.0 lakh for individuals above 60 years but below 80 years of age
* Rs 5.0 lakh for individuals above 80 years of age
Under the new tax regime, the basic exemption limit for FY 2023-24 (FY 2024-25) is Rs 3 lakh for all categories of taxpayers.
When is it mandatory to file ITR, regardless of the income level?
According to Neeraj Aggarwal, partner, Nangia Andersen India, there are certain circumstances in which individuals are required to file ITR, regardless of their gross total income:
* If a person’s annual deposits in one or more savings accounts exceed Rs 50 lakh, it is mandatory for them to file ITR.
* Individuals whose electricity bills exceed Rs 1 lakh during the year need to file ITR.
* People who own assets abroad, are beneficiaries of such assets, or have signing authority on a foreign account, need to file ITR.
* Professionals earning more than Rs 10 lakh during a financial year are required to file ITR.
* If a person’s TDS/TCS exceeds Rs 25,000 (or Rs 50,000 for senior citizens), it is mandatory to file ITR.
* Individuals who spend Rs 2 lakh or more on foreign travel for themselves or others during the financial year are required to file ITR.
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To better understand these requirements, consider the following examples:
* Example 1: Suppose a salaried individual has a gross taxable income of Rs 5.5 lakh, eligible for standard deduction of Rs 50,000, deduction under 80C of Rs 1.5 lakh and other deductions totalling Rs 1,10,000, then you need to file ITR.
* Example 2: If your net taxable income is Rs 4.25 lakh, which is less than the limit of Rs 5 lakh or Rs 7 lakh (depending on income tax) Tax regime), you are exempted from paying income tax due to exemption under section 87A. However, you will still have to file ITR as long as your gross total income exceeds Rs 2.5 lakh (old tax regime) or Rs 3 lakh (new tax regime).
* Example 3: As a salaried individual with a gross taxable income of Rs 7.5 lakh and a standard deduction of Rs 50,000, you may not have to pay any income tax after deductions and exemptions. Nevertheless, filing ITR is still mandatory.
Aggarwal says, “If a person’s total income, excluding deductions under Chapter VI-A, exceeds the basic exemption limit, he is required to file income tax return. In this case, the total income excluding gross deductions under section 80C will be Rs 3,90,000 (Rs 5.5 lakh – Rs 50,000 – Rs 1.1 lakh) (assuming other deductions are not under Chapter VI-A), and he is required to mandatorily file his ITR.”
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What are the consequences of not filing ITR, even though it is mandatory for you to do so?
If you are required to file ITR but fail to do so by the deadline of July 31, 2024, you have the option of filing a belated ITR. However, if you choose not to file at all, you may face several consequences, says Agarwal.
Firstly, under Section 234A, if you do not pay your taxes on time, you will have to pay penal interest at the rate of 1% per month on the outstanding tax amount. Additionally, if there is a delay in the payment of advance tax, interest will be levied under Section 234B.
Moreover, as per section 234F, not filing your ITR within the due date will attract a late fee of Rs 5,000. However, if your annual income is less than Rs 5 lakh, the late fee will be limited to Rs 1,000. If your gross income is less than the basic exemption limit, no penalty will be levied.
It is important to note that on filing a delayed ITR, you lose the ability to carry forward losses from stocks, futures and options (F&O) and other sources. However, you can still carry forward losses from house property.
Moreover, filing ITR is a prerequisite for receiving any tax refund. If you file ITR late, you will not get any interest on the tax refund.
If you do not file ITR, the Income Tax Assessing Officer has the right to make a best judgment assessment. This means that the tax officer can estimate your income and tax liability based on the information available with him.
Finally, if you fail to file your ITR and do not opt for the old tax regime by submitting Form 10-IEA, your income tax will be calculated under the new tax regime by default. As a result, you may miss out on claiming gross deductions that would have been applicable to you.
