Income tax return filing 2024: Who is required to file ITR?

Based on my conversation with my salaried friends, I get the impression that many of them are under the impression that they are not required to file any ITR if appropriate income tax has been deducted from their salaries. Most of them treat the tax deduction at the source as fully complying with the law. Even retirees feel that as the bank has already deducted tax on the fixed deposit interest, they are not required to file their ITR. This is not correct.

Filing your income tax return and discharging appropriate tax liability are two different responsibilities that must be discharged appropriately.

This is the first article in a series on ITR in which I will explain who must file an ITR. If you satisfy any of the criteria discussed below, you must file your ITR even if you do not have any income in India.

Gross total exceeding basic exemption limit

You are required to file your ITR if the aggregate of all your income before deduction under various sections of chapter VIA like 80 C, 80 CCC, 80 CCD, 80 D, 80E, 80G, 80 GGA, 80 TTA/80TTB, etc. exceeds the basic exemption limit. These sections deal with deductions available for various investments/payments made by you like PPF, NPS, ELSS, NSC, principal repayment of your home loan, school fee, life insurance premiums, medical premiums, donations, interest on education loan, rent paid by self-employed etc.

Section 80 TTA/80TTB allows you a deduction for interest earned on your savings bank account. The basic exemption limit for the year ended 31 March 2024 is ₹2.50 lakh for an ordinary individual, ₹3 lakh for a resident individual of over 60 years, and ₹5 lakh for an Individual above 80 years.

If you opt for the new tax regime, the basic exemption limit is ₹3 lakh for each individual, irrespective of age. While arriving at the basic exemption limit for the limited purpose of filing your ITR, you must include the long-term capital gains for which you are claiming exemption. This will cover all those who have sold their residential house and do not have any tax liability due to section 54 as they have invested the capital gains in another residential house even if they do not have any significant income otherwise.

Having assets or signing authority outside India by resident taxpayers

You are also required to file your ITR if you are a resident of India for income tax purposes and own any asset outside India in your name as a beneficial owner or have an interest in any asset outside India. You must also file your ITR even when you are an authorised signatory for any account maintained outside India. The assets owned by you outside India may be immovable or movable. For example, if you had gone outside India on deputation or employment and had opened a bank account and forgot to close it while returning, you must still file your ITR even if no money is left in the bank account.

Likewise, if you have invested in shares, bonds, or mutual fund schemes of foreign companies or have Employee Stock Options (ESOPS), you are covered here and must file an ITR here, irrespective of your income level.

Expenditure on specified items beyond certain limits

You have to file an ITR if you have paid electricity charges of over one lakh rupees during the last year, even if the electricity connection is not in your name. Likewise, you must file your ITR if you have spent more than two lakhs rupees on foreign travel. The expenditure might have been incurred for your travel or any other person, but you are covered here as long as you have paid for the trip.

Deposits beyond specified limits in your bank accounts

The law requires you to file an ITR if you have made deposits in your bank account beyond certain limits. For a current account, this limit is one crore rupees in aggregate for one or more current accounts.

The limit for savings bank accounts is fifty lakh rupees in one or more savings bank accounts taken together. Please note that the deposits to be considered for this purpose are cash deposits and all the amounts deposited in your bank account, whether through cheques, bank drafts, or even bank transfers.

Turnover/gross receipts and TDS beyond certain limits

In addition to the above criteria, the law also has prescribed that you file an ITR irrespective of your income level if the value of all your sales exceeds sixty lakh rupees in case you are engaged in business. If you are carrying on the profession, the threshold limit is ten lakh rupees from the previous year.

You must also file an ITR if the aggregate of tax deducted or tax collected from you exceeds twenty-five thousand rupees in the year. However, in case you are over sixty year of age a higher amount of fifty thousand of TDS/TCS is applicable in your case.

I am sure by now you are in a position to understand the exact requirements of laws as to who has to file an ITR.

Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.com and on @jainbalwant on Twitter.