The tax season has started, and everybody is gathering the documents and proofs of investment to calculate their tax liability, pay the tax where it’s due, and file their income tax returns (ITRs) to conclude this annual exercise.

Yet many people, having no taxable income to report, think they are not required to file an ITR. Although it is partly right that filing an ITR is not mandatory for those whose income is not more than the basic exemption limit, in some cases, it is mandatory even if the total income is less than the taxable slabs.

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Under Section 139 (1) of the Income-tax Act, 1961, “a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income, or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner, and setting forth such other particulars as may be prescribed”.

Says Sudhir Kaushik, CEO, Tax spanner, a tax advisory firm: “It’s always better to file as early as possible to avoid last-minute rush and lose some tax deduction in haste. You get interest on any refund due from April 1 onwards, if you file before the due date. Also, the earlier you file the return, the earlier it gets processed.”

According to a Central Board of Direct Taxes (CBDT) notification dated April 21, 2022, and some other changes effected early in the assessment year 2020-21, following are the conditions upon which filing an ITR becomes mandatory irrespective of whether the person is in the taxable slab or not.

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Foreign Assets And Foreign Travel

If an individual has spent Rs 2 lakh or more on self or for somebody else for travelling to a foreign country, then, filing an ITR is mandatory. Even if the expenditure is totally for another person, filing a return is necessary for that year.

Also, if an individual holds any assets in another country, has a signing authority in an account outside India, or has a financial interest in any entity abroad, he/she is liable to file an ITR.

Electricity Bill Of More Than Rs 1 Lakh

An individual who has paid an electricity bill of Rs 1 lakh or more during a financial year, whether for a single bill or on an aggregate basis, has to file a tax return as per the tax rule, even if there is no tax liability on the total income.

Income Above Rs 10 Lakh

If a person’s gross professional income is more than Rs 10 lakh in a financial year, it is mandatory to file an ITR. So, even if there are exemptions and deductions to be considered, if the gross professional receipts are more than the limit, filing an ITR is mandatory.

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TDS Or TCS More Than Rs 50,000

When the tax deducted at source (TDS) and tax collected at source (TCS) exceeds Rs 50,000 in a financial year, ITR is mandatory in case of resident senior citizens. For people less than 60 years old, the TDS/TCS limit is Rs 25,000 for a mandatory filing of ITR.

Savings Bank Deposit Of Rs 50 Lakh

If a balance in a single savings bank account or multiple accounts is more than Rs 50 lakh during the previous year, then such individuals have to file an ITR.

Besides this, sometimes, individuals also open current accounts. If the balance becomes more than Rs 1 crore during the year in one or more current accounts in a bank, including a co-operative bank, the person (other than a company or firm) becomes liable to file an ITR under the income tax rules.

While the above conditions make ITR filing mandatory, having no such income or expenditure does not mean ITR filing is a wasteful exercise.

Also, even if your income is less than the basic exemption limit, regular ITR filing is beneficial for things, such as getting a loan, claiming a TDS refund, applying for a visa, or carrying forward any loss.

So, one should file a return, and timely, if one has paid taxes or has to claim a refund, because the implication of missing out could be serious.

Says Kaushik: “If your income tax liability exceeds Rs 25,000 and you fail to file your ITR, you could face rigorous imprisonment ranging from six months to seven years, along with a fine. If your tax liability is less than Rs 25,000, you could face rigorous imprisonment from three months to two years, along with a fine. Timely filing of your ITR is crucial to avoid these penalties and interest charges.”

July has already begun; so take note of all your income and investments, and file your ITR before the last due date of filing.