Many people know that they must file an income tax return (ITR) if their taxable income exceeds the basic income tax exemption limit. However, income tax laws also require ITR filing in specific situations, even if the taxable income is below the basic exemption limit.
The following are the scenarios in which filing an ITR is required, even if the total taxable income is below the basic exemption limit.
Who needs to file ITR in India
- Holding foreign assets or having foreign income: If you are a resident individual who has invested in shares of foreign companies and receives dividends from these investments, you are required to file an ITR. According to Section 139(1) of the Income-tax Act, ITR filing is mandatory for resident individuals who own assets such as shares, bonds of foreign companies, a house in foreign countries, or have income such as dividends, interest, or rent from foreign countries. Additionally, ITR filing is mandatory for individuals who have signing authority in any account outside India.
- Spending Rs 2 lakh and above for foreign travel: Resident individuals are required to file their ITR if they have spent Rs 2 lakh or more, either at once or in total during a financial year, on their own or someone else’s travel to a foreign country.
- Paid electricity bill of Rs 1 lakh in financial year: If a taxpayer has paid an electricity bill totaling Rs 1 lakh either as a single payment or in aggregate during a financial year, filing an ITR is mandatory.
- Claiming tax exemption on capital gains: ITR filing is mandatory if an individual’s gross total income exceeds the exemption limit before claiming tax exemption on capital gains. Under the Income-tax Act, an individual can claim exemption on capital gains through sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA or 54GB.
- TDS or TCS of Rs 25,000 has been deducted or collected: In April 2022, the income tax department issued a notification stating that individuals are required to file their income tax return if the total tax deducted or collected from them during the financial year amounts to Rs 25,000 or more
- Deposited Rs 1 crore in current account: Self-employed individuals with a current bank account are required to file their ITR if they have deposited an amount equal to or exceeding Rs 1 crore in a financial year.
- If you have to claim income tax refund: Sometimes, individuals may have excess tax deducted from their income, such as interest and dividends. In such instances, they must file an income tax return to claim a refund.
Also Read :- Fine and Penalties: Not filing Income Tax Return
