This article provides essential information about the individuals who are obligated to file an income tax return. Understanding these criteria is crucial to comply with tax regulations, avoiding penalties, and ensuring a smooth tax filing process.
Who’s required compulsorily file Income Tax Return? Understanding the Mandatory Criteria
Basic exemption threshold limit: If your total income, before claiming any Income Tax Savings & Deductions, exceeds the basic exemption threshold limit, then you are required to file an income tax return.
Persons holding assets located outside India: If you hold or are a beneficiary of any assets (including any financial interest in any entity) located outside India, or if you have signing authority in any account outside India, then you are required to compulsorily file an income tax return.
With effect from the Assessment Year 2020-21, if you don't need to file an income tax return as per any other provision of section 139(1), there are certain situations in which you still have to file a return of income. These situations include:
If you have deposited an amount (or a total amount) exceeding Rs. 1 crore in one or more current accounts with a bank or a cooperative bank.
If you have spent a total amount exceeding Rs. 2 lakh on travel to a foreign country for yourself or someone else.
If you have spent a total amount exceeding Rs. 1 lakh on payment of electricity bills.
In these cases, it is mandatory for you to file an income tax return.
The Central Board of Direct Taxes (CBDT) has issued a notification, number 37/2022 dated 21-04-2022, which includes additional conditions under the seventh provision of section 139(1) for mandatory filing of income tax returns. These additional conditions are as follows:
If the total sales, turnover, or gross receipts of your business exceed Rs. 60 lakh during the previous year.
If the total gross receipts of your profession exceed Rs. 10 lakh during the previous year.
If the total amount of tax deducted and collected from you during the previous year is Rs. 25,000 or more. However, if you are a Senior Citizen (60 years or more), the threshold limit is Rs. 50,000.
If the total amount deposited in your one or more savings bank accounts is Rs. 50 lakhs or more during the previous year
In simple terms, if your business or profession earns more than a certain amount if a significant amount of tax has been deducted from your income, or if you have made large deposits in your savings bank accounts, then you are required to file an income tax return.
Filing an income tax return is mandatory in various circumstances to ensure compliance with tax regulations. It is important to be aware of these conditions and fulfill the requirement to avoid penalties or legal issues. If you fall under any of these categories, it is advisable to consult a tax professional or refer to official guidelines for accurate filing and compliance.