Situations Where ITR Need to Be Filled Even Income Below Basic Exemption Limit

Income Tax Return (ITR) is a Return which is to be filled by the assessee to the Government as per the Laws of Income Tax Act. ITR is a document where all the Incomes, Profit & Loss, any other deduction, Capital Gains, etc are reported and the Tax liability or Refund is calculated.

The due date for filling of ITR for Corporate and Other Assesses who need to get their accounts Audited is 30th September and for the others is 31st July after the end of the Financial Year. However due to Covid-19 the ITR for FY 2019-20 is extended to 31st January 2021 for those whose due date was 31st September and 31st December for those whose due date was 31st July.

The Basic Exemption Limit given by the Government is Rs. 2,50,000. This means that if a person has Income below Rs. 2,50,000 need not file ITR for that Financial Year. However, there are some Situations where a person needs to file ITR even if the Income is below Rs. 2,50,000/-.

The follow are the Situations where a person needs to file ITR even if the Income is below Rs. 2,50,000 –

·Taxpayers who are Claiming Refund –

There may be a possibility that TDS has been cut on the name of the assessee but his total income is below Rs. 2,50,000 for e.g. TDS is deducted on Dividend paid to the assessee by the company but the total income of the assessee is below exemption limit. He needs to file the ITR to claim such refund, TDS is also deducted on Fixed Deposit Interest by the Bank and the Income if Assessee is below exemption limit then he may need to file ITR for claiming such refund.

·ITR to be filled by Legal Heirs –

When a person dies along with Assets and Liabilities the responsibility of filing last return of the deceased falls on the Legal Heirs. The last return of the deceased needs to be filed by the Legal Heir as per provision of the Income Tax Act and surrender the PAN and Aadhaar of the Deceased.

·For Setting off and Carry Forward of Losses –

Setting off losses means adjusting of previous year losses from the current year income or profit. Sometimes it happens that even after setting of losses with the current year income or profit there may some unadjusted losses left. To carry forward such loss assessee needs to file ITR. Also, there may be current year loss which needs to be carried forward for future adjustment against future Income or Profit.

·Required for Getting Loan Approval –

While applying for loan to any NBFC or a Bank the basic document requirement by them is last 3 years ITR. On the basis of Income declared in ITR, NBFC or a Bank may approve the loan amount to the assessee. So, if an assessee need to get loan in the future he may need to file the ITR regularly.

·Receipt of Gift above Rs 50,000 –

The gifts received by the assessee in form of money or in other forms are exempted from tax if the amount in a given financial year is below Rs 50,000. Tax will be applicable if the gift amount is more than Rs. 50,000 under the head “Income from Other Sources”.

·For Claiming Deductions and Exemptions –

Before claiming deduction and exemptions if your total Income is above basic exemption limit, but after claiming deduction and exemption your income goes below basic exemption limit then assessee needs to file the return in such case. Also, for claiming exemption of Long-Term Capital Gains assessee need to file return, for e.g. Assessee can claim exemption for buying new house after selling old house with certain conditions.

-Akash Girish Doshi

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