Based on my conversation with my friends who are salaried I gather the impression that majority of the employees are under the impression that they are not required to file any ITR if appropriate income tax has been deducted from their salaries. Most of them take deduction of tax at source as filing of the ITR by the employer. Or even retirees feel that as the bank has already deducted tax on the fixed deposit interest, they are not required to file their ITR. This is not so. Filing of your income tax return and discharging appropriate tax liability are tow different responsibilities and both have to be discharged appropriately. People are also under the impression that if I fail to file the return by 31st July, I cannot do it later on as the deadline of 31st July is sacrosanct and is a now or never thing. Let us understand who is required to file the income tax return. This discussion is restricted to provisions applicable to an Individual and does not cover other tax payers.
You are required to file your income tax return if aggregate of all your income before deduction under various sections of chapter VIA like Section 80C, Section 80CCC, Section 80CCD, Section 80D, Section 80E, Section 80G, Section 80 GGA, Section 80TTA exceeds the basic exemption limit. These sections deal with deductions available for various investments/payments made by you like PPF, NPS, ELSS, NSC, repayment of your home loan principal, school fee, life insurance premiums, mediclaim premiums, donations, interest on education loan, rent paid by self employed etc. Section 80 TTA allows you a deduction for interest earned on your saving bank account. The basic exemption limit for the year ended 31st March 2018 is Rs. 2.50 lakhs for an ordinary individual, Rs. 3 lakhs for a resident individual of over 60 years, referred to as senior citizen and Rs. 5 lakhs for an resident Individual above 80 years referred to as super senior citizen. While arriving at the basic exemption limit for this limited purpose of filing of your ITR, you have to add the exemption available under Section 10(38) for long term capital gains on listed equity shares and units of equity oriented scheme. So effectively you may not have taxable income after the specified deductions or exemptions and thus have no tax liability ultimately, you still have to file your income tax return.
You are also required to file your income tax return in case you are resident in India for tax purposes and own any asset outside India in your own name as beneficial owner or have interest in any asset outside India or even when you are an authorized signatory for any account located outside India. Please note that the asset which you may own outside India may be an immovable asset as well as movable asset. So this will apply to you without you noticing it. For example if you had gone outside India on deputation or employment and had opened a bank account and forgot to close it. This applies to you even if there is no money left in the bank account there. Likewise if you have invested in shares, bonds or mutual fund of foreign companies, you are required to file ITR irrespective of your income level for the year. So you will have to file the ITR in case you have received employee Stock Options (ESOPs) from a foreign company which is holding company of your Indian employer.
Balwant Jain is a tax and investment expert and can be reached at firstname.lastname@example.org and @jainbalwant on twitter.