An individual require filing income tax return, if his/her gross total income exceeds the basic exemption limit of income of Rs.2.5 lakh before permissible deductions under Sections 80C to 80U. The people with gross total income below exempted limit of Rs.2.5 lakh or Senior citizen of above 60 years and below 80 years with gross total income of Rs.3 lakh or super senior citizen of above 80 years with gross total income of Rs.5 lakh before permissible deductions under Sections 80C to 80U need not mandatorily file ITR.
However, in the following cases even though the income is below above mentioned basic exemption limit, individuals would be required to file ITR in India.
- Any person who travelled abroad during the financial year
- Any person who have deposited Rupees one crore and above in the Current account of the bank.
- Any person who have paid Rs.1 lakh as electricity bill during a financial year
- An Indian resident who acts as a signing authority for any foreign account.
- An Indian resident who is a beneficiary of any asset or financial interest located outside India.
- Any person who is claiming any benefit under Double Taxation Avoidance Agreement (DTAA).
- Any person who has sold equity shares in a company or unit of equity oriented mutual funds or unit of business trust for more than Rs.2,50,000 and have gained tax-exempt long-term capital gains from the same.
- Any person who receive income derived from the sale of a property which had been held under a charitable trust, religious trust, political party, educational institution, any authority, body or trust.
- Previously, an individual is spared of filing ITR even with high income owing to certain income falling below the exemption limit under taxable income like LTCG arising from sale of house and investment in another house (section 54) or eligible bonds (sec 54EC) or LTCG arising out of sale of securities invested in another house (54F) is no longer exempted from filing IT returns for the financial year 2019-20.
- NRIs who have received gift from India after July 5, 2019 either in the form of money (above Rs.50000/-) or immovable property (the value of which exceeds Rs.50000/) will be taxable in India. However, gift received from the invited relatives will continue to be exempted. Gift received from relatives during marriage occasion or by way of inheritance won’t come under tax net. The term ‘relatives’ is narrowly defined under the act covering gifts from parents, spouse, siblings, maternal or paternal aunts and uncles (and their spouses).
- An NRI whose total annual gross income earned or accrued in India exceeds Rs2, 50,000 shall file IT return.
- A foreign company which has been taking any treaty benefit on any transaction made in India.
- It is obligatory for companies or firms, filing ITR for the financial year irrespective of them earned profit or loss.
Even if the income is below the basic exemption limit, an individual should consider filing a ‘Nil Return’ to keep a record. There are several instances where income tax return serves as a proof of income while applying for a passport or taking a loan from the bank in case of self-employed people. If TDS has been cut on some investment made one will have to file the ITR to claim refund of the same. Income tax rules allow carry-forward losses to set them off against capital gains only to those who file ITR in the relevant assessment year. ITR filings are taken as valid income proofs in establishing income proof in compensation cases of accidental death or disability of self-employed persons.