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Sunday, July 14, 2024

is it mandatory for for any person other than a company or a firm to file return of income?

In India, the Income Tax Act, 1961 mandates every individual, including salaried employees, professionals, businesspersons, and others, to file their income tax returns annually. However, there are certain exemptions, and not all taxpayers are required to file returns.

As per the Income Tax Act, individuals with an annual income below the taxable limit (currently INR 2.5 lakh per annum) are not required to file their income tax returns. However, if an individual’s gross total income, before deductions under Section 80C to 80U, exceeds INR 2.5 lakh, they are required to file their income tax return, irrespective of whether tax is payable or not.

It is essential to note that the requirement to file returns may also depend on various other factors such as residency status, age, and source of income. For instance, individuals with an annual income of up to INR 3 lakh and who only have an interest income from savings bank accounts, are not required to file their tax returns.

However, even if an individual’s income is below the taxable limit, they may still have to file their returns if they meet any of the following conditions:
1. They have foreign assets or foreign income, or they are signatories of an overseas account.
2. They are a director in any company or hold shares of any unlisted company.
3. They have deposited more than INR 1 crore in a current account or have spent more than INR 2 lakh on foreign travel in a year.
4. They have paid more than INR 1 lakh towards electricity bills in a year.
Thus, it is essential for individuals to understand the income tax laws and determine whether they are required to file their returns. Failing to do so can result in penalties and legal consequences.

Moreover, it is always advisable to file income tax returns, even if it is not mandatory, as it can help in availing loans, applying for visas, and other financial transactions, where an individual’s income and tax compliance are taken into consideration. Filing returns can also help in claiming tax refunds and carry forward of losses, which can be used to offset future tax liabilities.

while it is not mandatory for individuals with an annual income below the taxable limit to file their income tax returns, it is advisable to do so, keeping in mind the exemptions and conditions mentioned above. It is always better to be tax compliant and file returns regularly, as it not only avoids legal consequences but also helps in availing various benefits and financial transactions.

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