Income Tax Return: Who should file ITR for FY 2020-21 compulsory?
Income Tax Return: The due date to file income tax return for the financial year 2020-21, or assessment year (AY) 2021-22 is September 30, 2021. Individuals under the age of 60 who earn up to Rs 2.5 lakh per year are exempt from paying income tax. If a person’s gross total income exceeds the tax exemption limit, they must file an Income Tax Return (ITR).
It’s important to note that paying taxes and submitting an ITR are two different and distinct legal duties that must be fulfilled separately. You must submit an ITR if you meet certain income and non-income requirements.
What is the Income Tax Return (ITR) filing Limit?
If the anybody’s income exceeds the basic tax exemption limit, one must file an ITR. Depending on your age, you have different basic exemption limitations. Individuals over 60 but under 80 years old (senior citizens) have Rs 3 lakh exemption limit, while those over 80 years old (super senior citizens) have Rs 5 lakh exemption limit.
When arriving at the aforementioned threshold limits for filing the ITR, various deductions allowed under Sections 80C, 80CCD, 80D, 80G, 80TTA, 80TTB, and others must be ignored.
Similarly, the amount of exemption claimed in respect of long-term capital gains under Section 54, 54F, 54EC, and other provisions for reinvestment in a residential property or capital gains bonds, even are exempt from income tax, must be added to your taxable income to determine the ITR filing threshold limit.
If your gross total income exceeds the basic exemption level but your taxable income falls below the exemption limit owing to different deductions, you are not required to pay any tax.
Who have to file ITR Compulsorily?
Even though your income is below the tax exemption level, you must submit an ITR due to two non-income conditions.
The beneficial interest might be in a fixed asset or a moveable asset, such as foreign busines shares, bonds, or ESOPs. Even if you have a bank account outside of India with no balance, you must file your ITR here in India, even if you are not required to do so otherwise. You must submit an ITR if your remuneration package includes ESOPs from a foreign company, which might be a holding company or a subsidiary company of your employer.
The second set of conditions applies to all individuals, whether or not they are tax residents. Even though their income is below the taxable threshold, they may be required to submit an income tax return under the following circumstances:
- Any Individual holding any asset (including financial interest in any entity) located outside India; or
- Individual having signing authority in any account located outside India; or
- Individual being beneficiary of any asset (including financial interest in any entity) located outside India.
- When Individual has deposited a sum of more than Rs 1 crore in a financial year in any current account held with a bank or a co-operative bank.
- Individual has made an expenditure on foreign travel of more than Rs 2 lakh in a financial year.
- Individual has incurred electricity expenses of Rs 1 lakh or more in a financial year.
- Income-tax return filing may also be required while availing any tax treaty relief, claiming refund of excess withheld taxes or while applying for a personal loan etc.
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