It is mandatory for a person to file an income tax return or ITR if the total tax withheld at source (TDS) or tax collected at source (TCS) during a fiscal year is Rs 25,000 or more. The rule applies even if a person’s income is below the taxable limit.
Earlier on April 21, 2022, the Central Board of Direct Taxes (CBDT) issued a notice – the Income Tax Rules (Ninth Amendment), 2022 – to state the additional conditions under which it is required to file income tax returns even when the income is lower than the basic exemption limit.
Income Tax (Ninth Amendment) Rules, 2022 reported the conditions for filing income tax returns in terms of clause (iv) of the seventh reservation to subsection (1) of Section 139 Income Tax Act, 1961. A new rule 12AB has included in the Income-tax Rules, 1962, to impose the additional provisions when filing an income tax return is required.
Income tax return must be in these four conditions:
1) A person is required to file an income tax return if his total turnover, turnover or gross income in the business exceeds Rs 60 lakh in the previous year
2) If the total gross income in the profession in the previous year exceeds Rs 10 lakh, the person must submit ITR.
3) If TDS or TCS is Rs 25,000 or more during the year, it is required to file income tax return. For seniors, this rule applies if the total TDS or TCS is Rs 50,000 or more per fiscal year.
4) The deposit in one or more savings accounts of the person totals Rs 50 lakh or more in the previous year, it is a must to file income tax return.
These additional provisions come into effect on the date of publication in the Government Gazette, according to the CBDT notification earlier. The new rules will therefore apply to filing the income tax return for the 2021-2022 financial year or 2022-2023 tax year.
“With this new provision, the Tax and Customs Administration wants to increase the tax base and reduce the occurrence of tax avoidance. If a person has a TDS of Rs 25,000 in a year, his or her gross income is likely to exceed Rs 250,000 in a fiscal year, which is the basic tax exemption limit. In this case, filing an income tax return is a must,” explains Balwant Jain, tax and investment expert.
Earlier in 2019, the central government had expanded the criteria for the income tax return. It is compulsory to file income tax if the person deposits Rs 1 crore or more in the checking account; spend Rs 2 lakh or more on foreign travel, pay Rs 1 lakh or more on electricity bill.
If the total income exceeds the threshold of the basic exemption, a person must file an annual income tax return.
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