The taxpayer has to communicate the details of his taxable income/loss to the Income-tax Department. These details are communicated to the Income-tax Department in the form of return of income.
Mandatory filing of return in certain cases
As per Section 139 (1) of the Income Tax Act, 1961, income tax return filing is mandatory for a certain class of people mentioned below –
Company or a firm;
A person other than a company or a firm, if his total income during the previous year exceeded the maximum limit not chargeable to income tax.
With effect from Assessment Year 2020-21, it is mandatory for every person(7th Proviso to Section 139 (1), (other than a company or a firm), who is not required to furnish return of income under any other provision of section 139(1), to file return of income if during the previous year he:
Has deposited an amount (or aggregate of amount) in excess of Rs. 1 crore in one or more current account maintained with a bank or a co-operative bank.
Has incurred aggregate expenditure in excess of Rs. 2 lakh for himself or any other person for travel to a foreign country.
Has incurred aggregate expenditure in excess of Rs. 1 lakh towards payment of electricity bill.
Now, vide Notification No. 37/2022, CBDT has notified a new Rule 12AB which prescribes additional conditions which mandate the filing of Income-tax returns despite the fact that income is below the basic exemption limit. These additional criteria are:
Total sales/turnover/gross receipts in the business exceed Rs 60 lakh during the previous year
Gross receipts in profession exceed Rs 10 lakh during the previous year
Aggregate TDS/TCS during the year is Rs 25000 or more (In the case of senior citizens increased limit of Rs 50,000 shall be applicable)
Deposits in saving bank account is Rs 50 lakh or more during the previous year.
This will be applicable for ITR Filling For FY 2021-22(AY 2022-23)
Applicability of ITR – 1 (SAHAJ) Return Form ITR – 1 (SAHAJ) can be used by a ordinarily resident individual whose total income includes: (1) Income from salary/pension; or (2) Income from one house property (excluding cases where loss is brought forward from previous years or loss to be carried forward; or) (3) Income from other sources (excluding winnings from lottery, income from race horses and income chargeable to tax at special rates). Further, in a case where the income of another person like spouse, minor child, etc., is to be clubbed with the income of the taxpayer, this return form can be used only when such income falls in any of the above categories.
Non-applicability of ITR – 1 (SAHAJ) Return Form ITR – 1 (SAHAJ) cannot be used by an individual:
Who is a Non-resident or Not Ordinarily Resident
Who is a Director of a company
Whose total income exceeds Rs. 50 lakhs
Who has income from more than 1 house property
Who has held unlisted equity shares at any time during the previous year
Who claims deduction under Section 80QQB or Section 80RRB in respect of royalty from patents or books
Who claims deduction under Section 10AA or Part-C of Chapter VI-A
Who has brought forward loss or losses to be carried forward under any head
Person claiming deduction under Section 57 from income taxable under the head 'Other Sources'(other than deduction allowed from family pension)
Who wants to claim relief under Section 90 or 91
Who wants to claim credit of tax deducted at source in the hands of any other person.
Who has any assets (including Financial Interest in an entity) located outside India.
Who has signing authority in any account outside India
Who has any income to be apportioned in accordance with provisions of Section 5A
Who has any of the following income:
(a) Income from Business or Profession
b) Capital Gains
c) Income taxable under the head 'Other sources' which is taxable at special rate
d) Dividend income exceeding Rs. 10 lakhs taxable under Section 115BBDA
e) Unexplained income (i.e., cash credit, unexplained investment, etc.) taxable at
60% under Section 115BBE
f) Agricultural Income exceeding Rs. 5,000
g) Income from any source outside India
In whose case:
The tax has been deducted on cash withdrawal under Section 194N.
The tax has been deferred in respect of ESOPs allotted by an eligible start-up.
Applicability of ITR – 2 This Return Form is to be used by an individual or an Hindu Undivided Family who is not having income chargeable to income-tax under the head “Profits or gains of business or profession”. Further, in a case where the income of another person like spouse, minor child, etc., is to be clubbed with the income of the taxpayer, this Return Form can be used if income to be clubbed falls in any of the above categories. Non-applicability of ITR – 2 Return Form ITR – 2 cannot be used by an individual or an Hindu Undivided Family whose total income for the year includes income from Business or Profession or he wants to claim deduction under section 10AA or part-c of chapter VI-A Applicability of ITR – 3 Form ITR – 3 can be used by an individual or a Hindu Undivided Family who is having income under the head business or profession. Non-applicability of ITR – 3
Form ITR – 3 cannot be used by any person other than an individual or a HUF. Further, an individual or a HUF not having income from business or profession cannot use ITR –3.
Applicability of ITR – 4 (SUGAM) Form ITR – 4 (SUGAM) can be used by an individual/HUF/Firm whose total income for the year includes : a) Business income computed as per the provisions of section 44AD or 44AE; or b) Income from profession computed as per the provisions of section 44ADA; or c) Income from salary/pension; or d) Income from one house property (excluding cases where loss is brought forward from previous years or losses to be carried forward); or e) Income from other sources (excluding winnings from lottery and income from race horses).
Further, in a case where the income of another person like spouse, minor child, etc., is to be clubbed with the income of the taxpayer, this return form can be used where income to be clubbed falls in any of the above categories.
Non-applicability of ITR – 4 (SUGAM) Form ITR – 4 (SUGAM) cannot be used by a person:
Who is a Non-resident or Not Ordinarily Resident
Who is a Director of a company
Whose total income exceeds Rs. 50 lakhs
Who has income from more than one House Property
Who has held unlisted equity shares at any time during the previous year
Who claims deduction under section 80QQB or 80RRB in respect of royalty from patent or books
Who claims deduction under section 10AA or Part-C of Chapter VI-A
Who has brought forward loss or losses to be carried forward under any head
Person claiming deduction under Section 57 from income taxable under the head 'Other Sources' (other than deduction allowed from family pension)
Who wants to claim relief under Sections 90 or 91
Who wants to claim credit of tax deducted at source in the hands of any other person.
Who has any assets (including Financial Interest in an entity) located outside India.
Who has signing authority in any account outside India
Who has any income to be apportioned in accordance with provisions of Section 5A
Who has any of the following income: a) Income from Business or Profession b) Capital Gains or Loss c) Income taxable under the head 'Other sources' which is taxable at special rate d) Dividend income exceeding Rs. 10 lakhs taxable under Section 115BBDA e) Unexplained income (i.e., cash credit, unexplained investment, etc.) taxable at 60% under Section 115BBE f) Agricultural Income exceeding Rs. 5,000 g) Income from any source outside India h) Income from speculative business and other special incomes. i) Income from agency business or commission or brokerage
Who has income of the nature specified in section 17(2)(vi) on which tax is payable/deductible under section 192(2) or 192(1C).
In case the assesse keeps and maintains all books of accounts and other documents referred to in section 44AA, and also gets his accounts audited and obtains an audit report as per section 44AB, filling up the Form ITR-4 (Sugam) is not mandatory. In such a case, other regular return forms viz. ITR-3 or ITR-5, as applicable, should be used.
Applicability of ITR – 5 Form ITR-5 can be used by a person being a firm, LLP, AOP, BOI, Artificial Juridical Person (AJP) referred to in section 2(31)(vii), local authority referred to in section 2(31)(vi), representative assessee referred to in section 160(1)(iii) or (iv), cooperative society, society registered under Societies Registration Act, 1860 or under any other law of any State, trust other than trusts eligible to file Form ITR-7, estate of deceased person, estate of an insolvent, business trust referred to in section 139(4E) and investments fund referred to in section 139(4F). Non-applicability of ITR – 5 Form ITR – 5 cannot be used by a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4C) or 139(4D) (i.e., trusts, political parties, institutions, colleges, etc.). Applicability of ITR – 6 Form ITR – 6 can be used by a company, other than a company claiming exemption under section 11 (exemption under section 11 can be claimed by a charitable/religious trust).
Non-applicability of ITR – 6 Form ITR – 6 cannot be used by a company claiming exemption under section 11 (exemption under section 11 can be claimed by a charitable/religious trust).
Form ITR – 7 can be used by persons including companies who are required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) (i.e., trusts, political parties, institutions, colleges, etc.).
Non-applicability of ITR – 7 Form ITR – 7 cannot be used by a person who is not required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) (i.e., trusts, political parties, institutions, colleges, etc.).
Precautions to be taken while filing the return of income Following is the list of few important steps/points/precautions to be kept in mind while filing the return of income:
The first and foremost precaution is to file the return of income on or before the due date. Taxpayers should avoid the practice of filing belated return. Following are the consequences of delay in filing the return of income : o Loss (other than house property loss) cannot be carried forward. o Levy of interest under section 234A. o Levy of fee under section 234F* o Exemptions under sections 10A, 10B, are not available. o Deduction under Part-C of Chapter VI-A shall not be available.
Fee as per section 234F is required to be paid if return is furnished after due date. Fee for default in furnishing return of income will be Rs. 5000 if return is furnished after due date mentioned u/s 139(1) However, late filing fee shall not exceed Rs. 1000 if the total income of an assessee does not exceed Rs. 5 lakh
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