income tax: The process for filing income tax returns has begun. Taxpayers can file their ITRs with the necessary documents to ensure a hassle-free experience. Many people believe that if their annual income falls below the tax exemption limit, they do not need to file an income tax return.
For context, this exemption limit is ₹2.5 lakh under the old tax regime and ₹4 lakh under the new tax regime. However, the income tax Department has established specific rules that make filing an ITR mandatory under certain circumstances, even if one’s income does not technically fall within the taxable bracket. In such cases, specific financial transactions necessitate the filing of a return.
You might be surprised to learn that if an individual deposits more than ₹1 crore in one or more current accounts during a financial year, they are required to file an ITR. Similarly, filing a return is mandatory if an individual deposits a total of ₹50 lakh or more across one or more savings accounts.
High expenditure on foreign travel
If an individual spends more than ₹2 lakh on foreign travel—whether for themselves or for someone else—they must file an income tax return, regardless of whether their income is below the tax exemption limit.
Electricity bills can also be a trigger.
If an individual pays electricity bills exceeding ₹1 lakh during a financial year, filing an ITR becomes mandatory.
Rules regarding foreign assets
For any resident of India, filing an ITR is mandatory if they own a foreign asset, are a beneficiary of a foreign asset, or hold signing authority for an account located abroad.
Additionally, if an individual runs a business and their total sales, turnover, or gross receipts exceed ₹60 lakh, they must file a return. For professionals such as doctors, lawyers, and chartered accountants, this threshold is set at gross receipts of ₹10 lakh.
What happens if excess TDS or TCS is deducted?
If an individual’s total TDS and TCS in a financial year amount to ₹25,000 or more, they are required to file an ITR. For senior citizens, this limit is set at ₹50,000.
Why is filing an ITR beneficial?
Even if filing an ITR is not legally mandatory for an individual, there are several benefits to doing so. It serves as official proof of income, facilitates tax refunds, proves useful for bank loans and visa applications, and helps maintain financial records for the future.
