Are You required to file an IT Return?

We have bid goodbye to the Financial Year 2013-14 and now the tax filing season will begin for Assessment Year 2014-15. Are you wondering if you are required to file a return in India? Read on to know more.

FIle your IT Return

The IT Department is identifying several non-filers who have done high value transactions and those could be penalized for non-filing of returns or non-payment of taxes.

Let’s understand whether you are required to file an Income Tax Return in India.

Mandatory Filing – In the following situations the Income Tax Act its mandatory for you to file an Income Tax Return in India for Financial Year 2013-14 or Assessment Year 2014-15

(1)    You are a Company or a Firm – irrespective of whether you have Income or Loss

(2)    You are a Person other than a Company or a Firm – when your Gross Total Income (Income before giving deductions under section 10A, 10B, 10BA, 80C to 80U) is more than the amount of minimum exempt income. Minimum Exempt Income is Rs 2,00,000. If you are a Senior Citizen (60 yrs or more at any time in the financial year) exemption limit is Rs 2,50,000 and if you are a Super Senior Citizen (80yrs or more at any time in the financial year) the limit is Rs 5,00,000.

(3)    You are a Resident Indian and you have any asset or a financial interest in any entity which is located outside India or you are a signing authority in any account outside India – irrespective of whether you have taxable income or not. (this is not applicable to you if you are a NRI or a Resident but Not Ordinarily Resident).

(4)    You are a person who is in receipt of income derived from property held under a trust for charitable or religious purposes OR A Political Party OR a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any body, any authority or trust – when your Gross Total Income before deductions exceeds minimum amount not chargeable to tax.

You are an NRI – In case you are a Non Resident, you will be required to file a return in India, if you are any one of the Person listed above and your income is ‘earned’ in India.  Which means any income received in India or the law deems it to be received in India by you or on your behalf OR any income that accrues or arises in India or income that the law believes accrues or arises in India to you will be taxed.

Penalties – While the IT department has already upped its game to hunt the tax evaders and non filers by keeping a close watch on bank accounts and credit card expenses – there are also a set of penalties laid down in the Income Tax Act. Under section 234A interest is levied when you do not file a return or you file a return after the due date. Under section 271F a penalty of Rs 5,000 is payable when you fail to file a return. Additionally, when you do not file your return and your assessing officer believes income has escaped tax, he has the authority under the Act to assess your income for a period of up to 4 years (however small may be such income). He can also assess your income beyond 4 years up to 6 years – when your escaped income is Rs 1,00,000 or more. The time limit for him to assess your income goes up to 16 years if your income from asset situated outside India chargeable to tax has escaped assessment.

Need a Refund – In case excess TDS has been deducted on your income and you need to claim a refund – in this situation you must file a return to claim the tax refund.

Need a Loan – When you reach out to a bank or a financial institution for a loan a house loan or a personal loan – they usually require copies of your IT returns to check your credit worthiness. And therefore, it makes sense to keep your finances in order and file an IT return.

Carry forward & Set off of Losses – Though as a Company or a Firm you are required to file a return irrespective of whether you have income or losses. In cases where a person has Loss under the head ‘Income from House Property’ or loss under the head ‘ Profits & Gains of Business or Profession’ ‘Capital Gains’ or losses from ‘Income from Other Sources’. Such losses may be allowed to be carried forward and set off (upon fulfillment of certain conditions) provided a Return has been submitted by you in time.

Visas – Some countries require copies of your IT returns when they provide you a travel or a work visa.

So be the wonderful law abiding citizen that you are and file your returns on time! Reach out to clearTax, we support every kind of tax payer.



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