Mandatory Filing of Income Tax Returns – Who is supposed to file ITR for AY 2020-21?

There are some legal consequences for late filing and evasion, which this article will explore. Let’s understand whether you are required to file an income tax return in India for FY 2019-20

Mandatory Filing of Income Tax Return (ITR):

In any of the following situations (as per the Income Tax Act), it is mandatory for you to file an Income Tax Return in India.

1. Your gross total income (before allowing any deductions under section 80C to 80U) exceeds Rs 2.5 lakhs in FY 2018-19. This limit is Rs 3 lakh for senior citizens (aged above 60 but less than 80) or Rs 5 lakhs for super senior citizens (aged above 80).

2. You are a company or a firm irrespective of whether you have income or loss during the financial year

3. You want to claim an income tax refund

4. You want to carry forward a loss under a head of income

5. Return filing is mandatory if you are a Resident individual and have an asset or financial interest in an entity located outside of India. (Not applicable to NRIs or RNORs)

6. If you are a Resident and a signing authority in a foreign account. (Not applicable to NRIs or RNORs)

7. You are required to file an income tax return when you are 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

8. If you are a foreign company taking treaty benefit on a transaction in India

9. A proof of return filing may also be required at the time of applying for a loan or a visa

From Assessment Year 2020-21 (ie Financial Year 2019-20), following additional categories of people are also required to file Income Tax Returns if the threshold is crossed in FY 2019-20, even if they have NIL income or income of less than Rs 2.5 lakhs, 3 lakhs or 5 lakhs, as the case may be:

1. Those who have deposited more than Rs 1 crore in one or more of their bank accounts

2. Person who has bought foreign exchange of over Rs 2 lakh

3.Person who has paid an electricity bill of more than Rs 1 lakh

Penalty for Late Filing of Income Tax Returns:

From FY 2017-18 onwards, penalties for non-filing an income tax return are as follows:

a. A penalty of Rs 5,000 is applicable if the return is filed after the due date (31st Jul of respective AY for cases not covered by Tax Audit or Audit) but by 31 December.

b. A penalty of Rs 10,000 is applicable if the return is filed after 31 December of respective AY but by 31 March.

Note: Penalty is limited to Rs 1,000 for those with income up to Rs 5 lakhs. These provisions are covered under a new Section 234F.

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October 2021