Income Tax Return Filing

• Every person whose total income (before allowing any deductions under Section 80C to 80U) during the previous year exceeds the maximum amount which is not chargeable to tax is required to file an Income Tax Return in India. The basic exemption limit depends on the regime opted:
  • Old Tax Regime — Rs. 2,50,000 for individuals below 60 years; Rs. 3,00,000 for Senior Citizens (60 to less than 80 years); and Rs. 5,00,000 for Super Senior Citizens (80 years and above).
  • New Tax Regime under Section 115BAC (default with effect from FY 2023-24) — Rs. 3,00,000 basic exemption limit for all individual taxpayers irrespective of age. Taxpayers may opt out of the new regime by filing the prescribed form within the due date.
• If a person has Long-term Capital Gain or Short-term Capital Gain on sale of immovable property or investments (shares, mutual funds, etc.).
• If a person has an amount of TDS deducted or taxes withheld in India, and such taxes withheld are more than his Income Tax liability, then he can claim the excess amount as a refund only by filing Income Tax Returns.
• If a person has losses to be carried forward (loss may be due to sale of assets, investments, etc.).
• If a person being a resident has property or financial interest in an entity located outside India.
• If a person has entered into any transactions which are or are required to be reported under the Statement of Financial Transactions (SFT) under Section 285BA. Such transactions are now captured in the taxpayer’s Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) on the income-tax e-filing portal — the SFT framework replaced the erstwhile Annual Information Return (AIR) by the Finance Act, 2014.
• In case of LLP, Firm and Companies, filing of Income Tax Return is mandatory.
• Applying for visa or loan from bank / financial institutions requires ITR to be produced.
• If a person is in receipt of income derived from property held under a trust for charitable or religious purposes, or a political party, or a research association, news agency, educational or medical institution, trade union, a not-for-profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust.
• If a person being Resident has signing authority in a foreign account (not applicable to RNORs).

Under the Income Tax Law, different forms of returns are prescribed for different classes of taxpayers. The return forms are known as ITR forms (Income Tax Return Forms).

Even if the assessee has paid all taxes by way of TDS or Advance Tax, ITR filing is required because the amounts paid as advance tax and withheld in the form of TDS or collected in the form of TCS will take the character of your tax due only on completion of self-assessment of your income. This self-assessment is intimated to the Department by way of filing the return of income. Only then the Government assumes rights over the taxes paid by you. Filing of return is critical for this process and, hence, has been made mandatory. Failure will attract levy of penalty.

Section 139(8A), introduced by the Finance Act, 2022, allows a taxpayer to file an Updated Return (Form ITR-U) to correct mistakes or report previously omitted income. With the recent amendment, an Updated Return may be filed within 4 years from the end of the relevant assessment year (extended from the earlier 2-year window).

Filing ITR-U is subject to payment of additional tax:

• 25% of the aggregate of tax and interest if filed within 12 months of the end of the relevant AY.
• 50% within 24 months.
• 60% within 36 months.
• 70% within 48 months.

ITR-U cannot be filed to claim or increase a refund, declare a loss, or reduce tax liability. This is a useful remedy available to taxpayers who missed filing or who discover errors in their original or belated return.

We at Swati K and Co. Chartered Accountants, Bangalore, consisting of Chartered Accountants and professionals, will assist in filing Income Tax Returns and also advise our clients on tax planning and other related services. In case you need our services, please write to us at [email protected]. We will be happy to assist you.