From the fiscal year 2019-20, in a bid to clamp down tax evaders, the centre has enhanced the criteria for filing income tax return and consequently in some cases even individuals with income below taxable limit may be liable to file ITR. The scope of ITR filing has been enhanced to catch hold of individuals for whom there is a mismatch in income reported and expenses incurred.
Thus, even if your gross total income is below the taxable limit of Rs. 2.5 lakh for individuals below 60 years, Rs. 3 lakh for individuals aged between 60 and 79 years or Rs. 5 lakh for people aged 80 years and above, but you satisfy any of the below listed criteria you will have to file tax return.
Criteria To Ascertain Whether Or Not You Are Liable To File ITR For FY 2019-20
1. Expense amount on given heads
As per the seventh provision of Section 139(1) of the Income Tax Act, 1961, even if your income is below the taxable limit, you become liable to file ITR in the below cases:
1. Paid electricity charges of Rs. 1 lakh or higher in a year
2. Deposited a sum of more than Rs. 1 crore in one or more current bank accounts
3. Incurred Rs. 2 lakh or more on foreign travel on self or any other person. Furthermore, travel to a neighboring nation as well as travel for pilgrimage shall not make a person liable to file ITR.
Further, forms notified for Assessment year 2021 have been modified and entails a declaration from the assessee as to whether he or she is filing the ITR following the seventh proviso to Section 139(1).And in a case if the taxmann raises query, taxpayers filing taxes under this provisio need to have a record of documents maintained which can be produced easily for supporting one's claims.
In a case when you do not have income stream in India but possess any foreign asset, you are mandatorily required to file taxes or ITR in India. "Every individual being a resident and ordinarily resident in India, having any asset, including financial interest in any entity located outside India or signing authority in any account located outside India will be mandatorily required to furnish ITR, irrespective of the fact whether the resident taxpayer has taxable income or not," said Surana, founder of RSM India, a tax consulting firm.
Calculation of minimum tax-exempt income
As against the previous regime, tax exemption benefit availed on capital gains shall no longer be accounted for while computing minimum tax exempt income. Say for instance, if gross total income is Rs. 2 lakh and capital gains on sale of house property is Rs. 3 lakhs, which has been invested to avail exemption under Section 54C, you will now be required to file ITR as the gross total income will now be Rs. 2 lakh and Rs. 3 lakh i.e. Rs. 5 lakh.
But in the same case, income until last FY2019 shall be Rs. 2 lakh. Henceforth if your income before claiming exemption under Section 54 to 54GB is more than the basic exemption limit, you would be liable to file ITR.