Income Tax Return and Its benefits, What happened if you not file your ITR

Rate this post

Income Tax Return (ITR) is a form used to report an individual’s income and taxes paid to the government for a specific fiscal year. Filing an ITR is not only a legal obligation but also a crucial practice for maintaining transparency in financial matters. This article delves into the essentials of ITR, its forms, benefits, due dates, income limits, scenarios where filing is mandatory even with zero income, and penalties for late filing.

What is Income Tax Return?

An Income Tax Return (ITR) is a document that taxpayers use to declare their income, expenses, investments, and taxes paid. It provides the government with a comprehensive overview of an individual’s financial status and helps in assessing their tax liability. According to the Income Tax Act of 1961, any individual whose income exceeds Exemption limit must file an ITR.

Types of ITR Forms

The Central Board of Direct Taxes (CBDT) has specified several ITR forms, each designed for different types of taxpayers and Income. Here’s a brief overview of the primary ITR forms:

ITR 1 (Sahaj): For individuals with income up to Rs. 50 lakh from salary, pension, one house property, and other sources excluding lottery and racehorse income.
ITR 2: For individuals and HUFs not having income from profits and gains of business or profession.
ITR 3: For individuals and HUFs having income from profits and gains of business or profession.
ITR 4 (Sugam): For individuals, HUFs, and firms (other than LLP) with presumptive income from business and profession.
ITR 5: For LLPs, AOPs, BOIs, estates of deceased, estates of insolvents, business trusts, and investment funds.
ITR 6: For companies other than those claiming exemption under Section 11.
ITR 7: For persons including companies required to furnish returns under sections 139(4A) to 139(4F).

Benefits of Filing Income Tax Return

Legal Compliance: Avoid penalties and legal actions by adhering to tax laws.
Loan Approval: ITR documents are often required for home, vehicle, and personal loans.
Claim Refunds: Reclaim excess tax deducted at source (TDS) or advance tax payments.
Carry Forward Losses: Offset business or capital losses against future gains.
Proof of Income: ITR serves as proof of income for visa applications, credit cards, and government tenders.
Avoiding Scrutiny: Timely and accurate filing minimizes the risk of scrutiny by tax authorities.
Contribution to Nation Building: Taxes collected are utilized for national development.

Due Dates and Last Dates for Filing ITR

For FY 2023-24, the due dates for filing ITR are as follows:

Individual / HUF/ AOP/ BOI (non-audit cases): 31st July 2024
Businesses requiring audit: 31st October 2024
Businesses requiring transfer pricing reports: 30th November 2024
Revised Return: 31st December 2024
Belated Return: 31st December 2024

Income Limits for Filing ITR

The income threshold for mandatory ITR filing varies based on age and type of taxpayer:

Individuals below 60 years: Rs. 2.5 lakh
Senior citizens (60-79 years): Rs. 3 lakh
Super senior citizens (80 years and above): Rs. 5 lakh

Cases When Filing ITR is Mandatory Even with Zero Income

If an individual had deposited more than Rs 1 crore or more in one or more current Account
If an individual had deposited more than Rs 50 Lakh or more in one or more current Account
If an individual has incurred an expenditure exceeding Rs 2 lakh for himself or any other person for foreign travel.
Has incurred an expenditure exceeding Rs 1 lakh toward electricity payment in a year.
Is a beneficial owner or beneficiary of any asset outside India.
Is a signatory to a foreign bank account.
For professionals, if the gross receipts exceed Rs 10 lakh they have to file ITR.
For Businesses, if Turnover exceeds Rs. 60 Lakh
If amount of TDS/TCS is deducted more then Rs.25000 (Rs.50000 in case of Senior citizens)

Company/Partnership Firms: Must file ITR regardless of income, profit, or loss.
Loss Carry Forward: To carry forward losses for future adjustments, ITR must be filed.
Refund Claims: File ITR to claim refunds on excess TDS or advance tax paid.
Foreign Assets: Reporting foreign assets and income is mandatory.
Foreign Travel Expenses: If incurred over Rs. 2 lakh.
Electricity Bill Expenditure: If annual bill exceeds Rs. 1 lakh.
Deposit in Bank: If deposits in one or more bank accounts exceed Rs. 1 crore.