Simply Put: Mandatory return filing

Vishal Balabhadruni |BL Research Bureau | Updated on: Apr 30, 2022

There are additional situations which may compel you to file ITR

Two friends, a newly minted Chartered Accountant and a Commerce graduate, meet over a cup of tea. The conversation eventually veers to Income tax laws and invariably, return filing. It’s the turn of Balaji, the CA, to enlighten his friend.

Shyam: Balaji, I noticed that the income tax department was quite prompt in releasing the new ITR forms right at the beginning of April itself.

Balaji: Yes, that’s true. Like every year, there were some changes to forms this year too.

Shyam: Oh, is it so? I haven’t had to worry about ITRs so much, although I see a lot of friends and relatives cribbing about more and more information being asked for, with each passing year. Actually, last year, my income was within the exemption limit. So, I escaped having to file returns.

Balaji: Ok, but did you know that if you have to claim a refund in case TDS was deducted from your salary or you would like to carry forward a loss, you will invariably have to file a return even if your income is below taxable limit?

Shyam: Oh, I didn’t know that.

Balaji: Not only that. In 2019, the government stipulated that if a person deposits ₹1 crore or more in a current account, spends ₹2 lakh or more on foreign travel for self or others, or pays electricity bills in excess of ₹1 lakh, then the person has to file the Income tax return, even though he/she might have otherwise been exempt. Besides, a person claiming benefit of exemption from capital gains tax on investment in specified assets like house, bonds, etc., has to file a return if, before the claim, his/her total income was above the taxable limit, though it fell below the limit after considering the claim.

More importantly, about ten days ago, the tax department added a few more conditions to this list.

Shyam: Is it? What are the additional situations now that which call for mandatory return filing?

Balaji: On April 21, 2022, the Central Board of Direct Taxes inserted rule 12AB after rule 12AA in Income-tax Rules, 1962, to give effect to these additions.

The first criterion states that if a person is running a business and its total sales, turnover or gross receipts exceed ₹60 lakh during the previous year, then return filing is mandatory, irrespective of whether he/she is making profits or losses. Professional receipts in the previous year exceeding ₹10 lakh, TDS (Tax deducted at source) and Tax collected at source during the previous year being ₹25,000 or more (₹50,000 for residents aged sixty years or more) and, finally, deposits in one or more savings accounts aggregating to ₹50 lakh are three other situations that call for compulsory return filing.

Shyam: Looks like the list seems to be expanding to cover every possible scenario where there may be a leakage of tax revenues for the government

Balaji: Yes, when more and more people come under the tax net, it is easier to establish a trail.

Shyam: Anyway, as of now I don’t fall under any of these categories. But if I do get a good hike this appraisal season, I am sure I will automatically come under the tax next soon.

Published on April 30, 2022
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