Income Tax

Income Tax Return Filing Latest Updates– Financial Year 2021-22 (Assessment Year 2022-23)

Updated on: Jan 16th, 2023 - 12:31:36 PM

114 min read

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Are you unsure whether you should file an income tax return in India? Read on to know more.

Let’s understand whether you are required to file an income tax return in India for FY 2021-22

The government has released a notification vide Notification No. 37/2022 dated 21st April 2022 that specifies additional conditions for filing income tax returns if income is below the basic exemption limit.

The conditions specified in the said notification are mentioned below:

  • Total business sales/turnover/gross receipts during the financial year exceed Rs 60 lakh.
  • Total Professional gross receipts exceed Rs 10 lakh during the financial year.
  • Aggregate TDS and TCS during the financial year is Rs 25,000 or more (In the case of senior citizens, an increased limit of Rs 50,000 shall be applicable)
  • Total deposits in one or more savings bank accounts are Rs 50 lakh or more during the financial year.

The Act already contains certain conditions for filing an income tax return, even if the income is below the threshold limit. The requirements are:

  • If you have deposited an amount or aggregate of the amount over Rs.1 crore in one or more current accounts maintained with a bank or a co-operative bank. 
  • If you have incurred an aggregate expenditure of over Rs.2 lakh for yourself or any other person travelling to a foreign country.
  • If you have incurred aggregate expenditure over Rs.1 lakh towards payment of electricity bill.

Other Scenarios Where it is Mandatory to File ITR Return

In any of the following situations (as per the Income Tax Act), you must file an Income Tax Return in India:

  • Your gross total income (before allowing any deductions under section 80C to 80U) exceeds Rs 2.5 lakhs in FY 2020-21. 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).
  • You are a company or a firm irrespective of whether you have income or loss during the financial year.
  • You want to claim an income tax refund.
  • You want to carry forward a loss under a head of income.
  • 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).
  • If you are a Resident and a signing authority in a foreign account. (Not applicable to NRIs or RNORs).
  • 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.
  • If you are a foreign company taking treaty benefits on transactions in India.
  • Proof of return filing may also be required when applying for a loan or a visa.

Income Tax Return Filing for NRIs

NRI or not, any individual whose income exceeds Rs 2.5 lakh (for FY 2020-21) is required to file an income tax return in India. The limit is the same for all individuals. There is no higher threshold limit for senior or super-senior citizens. Please note that for an NRI, income earned or accrued in India is taxable in India.

There is one more exception for the NRI taxpayers. Unlike the resident Indians, if there is a long-term or short term capital gain, the non-residents are not eligible to benefit from the basic exemption limit. Hence, if the capital gains exceed Rs 2.5 lakh, the NRI must file an income tax return.

Why e-File Income Tax Return

A significantly large number of returns are e-filed, and gradually the income tax department is hoping to bring all returns online. It is mandatory to file the income tax returns online for all the registered taxpayers whose taxable income. However, paper returns can be filed by those above 80 years of age who do not have any income from regular business or professional income.

There are some legal consequences for late filing if you get away with putting this off by the due date.

a super senior citizen above 80 years of age can filed a paper return

Penalties for Non-Filing Income Tax Return

Under section 271F, the assessing officer may levy a penalty of Rs 5,000 when you have not filed your return (applicable until FY 2016-17).

Late Filing Penalty From FY 2017-18 Onwards 

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

  • A penalty of Rs 5,000 is applicable if the return for FY 2018-19 is filed after the due date but by 31 December.
  • A penalty of Rs 10,000 is applicable if the return for FY 2018-19 is filed after 31 December 2019 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.

Late Filing Penalty From FY 2020-21 Onwards

From FY 2020-21 onwards, the maximum amount payable on late filing of return is reduced to Rs 5,000.
Hence, from FY 2020-21 onwards, if the taxpayer file an income tax return after the due date, a penalty of up to Rs 5,000 shall be paid. However, there is no change in the penalty amount of the taxpayers with income below Rs 5 lakhs, i.e. the penalty is Rs 1,000.

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