With the tax season here, many taxpayers assume that filing an Income Tax Return (ITR) is necessary only when they have taxable income. Experts say that there are several situations where filing an ITR may still be required or beneficial if no tax is payable.
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Filing ITR helps create an official record of income and financial activity. An ITR is also necessary to claim certain tax refunds, including excess tax deducted at source (TDS). As a result, taxpayers are advised to review filing requirements carefully and submit returns to avoid losses and penalties.
Filing ITR Without Taxable Income:
1. With the government making up to Rs 12 lakh income tax-free with rebates in the new regime, many believe that they do not need to file ITR if their income falls below this threshold.
According to income tax rules, individuals whose taxable income remains below the applicable exemption limit are generally not required to file an ITR. But people with higher income levels need to submit their ITR despite zero tax liability. In the new regime, basic income exemption limit is only Rs 4 lakh, while in the old regime it stands at Rs 2.5 lakh.
2. A resident individual must file an ITR if they own an asset outside India, hold a financial interest in a foreign entity, are a beneficiary of an overseas asset, or have signing authority in a foreign bank account. The rule has gained importance as more Indians invest in US stocks, foreign exchange-traded funds (ETFs) and other international assets.
3. Individuals must also file an ITR if they spend more than Rs 2 lakh on foreign travel for themselves or another person during a financial year. This rule applies regardless of tax liability.
4. An ITR must also be filed if the total amount of TDS and tax collected at source (TCS) during the financial year exceeds prescribed limits. As per the rules, the threshold is Rs 25,000 for most taxpayers and Rs 50,000 for senior citizens. This requirement commonly affects fixed deposit holders, professionals, consultants, etc.
5. ITR filing is also mandatory for individuals with high-value bank deposits. Those who deposit more than Rs 50 lakh in one or more savings accounts during a financial year must file a return. Similarly, filing is required if deposits in one or more current accounts exceed Rs 1 crore during the year.
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6. Individuals engaged in business must file an ITR if their total sales exceed Rs 60 lakh during the financial year. The requirement is based on turnover rather than profits. Similarly, professionals such as doctors, lawyers, architects, consultants and freelancers must file an ITR if their gross professional receipts exceed Rs 10 lakh during the financial year.
7. Individuals whose expenditure on electricity consumption exceeds Rs 1 lakh during a financial year are required to file an ITR.
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