Income Tax Return Filing Amendment – FY 2021-22 (AY 2022-23)

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

The conditions are specified below:

●    Total business sales/turnover/gross receipts during the financial year exceeds 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 is Rs 50 lakh or more during the financial year.

“The Act already contains certain conditions where you are required to file an income tax return even if the income is below the threshold limit,” says Archit Gupta, founder and CEO, Cleartax, a tax portal. The conditions are as under: 

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

Other Scenarios Where It Is Mandatory To File ITR 

It is mandatory under the Income-tax Act to file an ITR in India in the following circumstances 
●    Your gross total income (before allowing any deductions under Section 80C to 80U) exceeds Rs 2.5 lakh in FY 2020-21. This limit is Rs 3 lakh for senior citizens (aged above 60 but less than 80) or Rs 5 lakh 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.
●    Filing an income tax return 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 ITR 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 a transaction in India.
●    A proof of return filing may also be required at the time of applying for a loan or a visa.

ITR Filing For NRIs

Says Gupta: “Any individual, NRI or not, whose income exceeds Rs 2.5 lakh (for FY 2020-21) is required to file an ITR in India. The limit is 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 NRI taxpayers, though. Unlike in case of 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 is required to file the ITR. 

Why e-File ITR

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

If you get away with putting this off by the due date, there are some legal consequences for late filing.

Penalties For Non-Filing Of ITR

Under section 271F, the assessing officer could 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 December 31, 2019.

•    A penalty of Rs 10,000 is applicable if the return for FY 2018-19 is filed after December 31, 2019, but by March 31, 2020.

Note: Penalty is limited to Rs 1,000 for those with income up to Rs 5 lakh. These provisions are covered under a new section 234F.

Penalty Provisions 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 files the 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 for taxpayers with income below Rs 5 lakh, i.e., the penalty is still Rs 1,000.