Most people believe that since there is no tax to pay they need not file their Income Tax Return (ITR) but this might not be true. Here is the post giving details about the following:
- Who needs to mandatorily file Income tax Return?
- Is e-filing ITR mandatory?
- Why people with any income should file their ITR?
- Whats the deadline for filing ITR?
- Whats the penalty for non-compliance?
Who needs to mandatorily file ITR?
As per Income tax laws;
You need to file your income tax return if your gross taxable income (without any tax saving deduction) is more than the basic tax limit applicable for you.
Gross Taxable Income is defined as
Total Income for the financial year
(Minus) Conveyance Allowance, LTA, HRA, Profession Tax, Home loan interest, etc.
But before exemptions under Section 80C to 80U etc which includes investments such as ELSS, PPF, NPS, Insurance etc
Below is the Basic Tax limit:
- For citizens below 60 years of age – Rs 2.5 Lakhs
- Between 60 and 80 years (Senior Citizens) – Rs 3 Lakhs
- Above 80 years (Very Senior Citizens) – Rs 5 Lakhs
- If you are 58 years of age and your income is Rs 3 lakhs, you need not necessarily pay tax as you can invest Rs 50,000 in Sec 80C (such as PPF, ELSS etc) and pay 0 taxes. But still you will need to file your tax returns.
- If you are 81 years of age and your income is Rs 4.5 Lakhs you need not necessarily file income tax return as the basic tax limit is Rs 5 lakhs for very senior citizens.
Other than the above you still need to file your ITR if you satisfy any of the following conditions:
- You have to claim any excess tax deposited
- You have losses that you want to take forward to next financial years
- If you have any foreign asset or income from sources outside India
- If you have income from property held by a trust
Why filing ITR is good idea?
Other than the categories of people described above who needs to mandatorily file ITR, we encourage everyone with income to file their ITR because of following reasons:
- ITR is required when you want to take any loan. This serves as valid income proof especially for the self employed.
- Also it’s useful document when you apply for Visa for some countries
- The filing of ITR is easy, free and can be done by self in 15 – 20 minutes especially if you income sources only from salary/pension, fixed deposit interests etc.
Is e-filing ITR mandatory?
You would need to e-file your income tax return in case
- You have to claim refund of excess tax paid
- Your gross income is more than Rs 5 lakhs
- You are claiming tax relief in India based on Double Taxation Avoidance Agreements (Sec 90, 90A, 91)
- ITR forms 3, 4, 5, 6 & 7 have to e-file
However for citizens above 80 years of age, they can still file their returns in paper format if they are using ITR forms 1, 2A or 2.
Last date for Filing ITR?
The last date for filing income tax return for AY 2015-16 (FY 2014-15) is August 31, 2015. However in case you are carrying on a business and your accounts are required to be audited, the due date gets extended till September 30, 2015.
What if you miss the ITR deadline?
In case you miss the deadline for filing your ITR for AY 2015-16, you can still do it by March 31, 2016 without any penalty and up to March 31, 2017 with penalty. But in either case you loose on following benefits:
- You cannot revise your returns in case you find any error on a later date
- You cannot carry forward your losses
- In case you had tax due, you will need to pay penalty on that – 1% for every month of delay
What’s the Penalty for non-filing ITR?
In case you do not file your income tax return for AY 2015-16 by March 31, 2016 (but should have filed as per IT laws), the assessing officer can put a fine of up to Rs 5,000 under section 271F after hearing the credits of your case.
Ideally everyone with income should file their IT return as it serves as valid proof of income. Paying taxes and filing returns are two different things and you should not default on either. So even if you paid all your taxes or have zero tax liability you must file your returns as per law.