Who is Required to File Income Tax Return Mandatorily?
Persons required to file Income Tax Return: Compliance with tax regulations is essential for every taxpayer, necessitating the comprehensive disclosure of income details to the Income Tax Department. For this purpose, this pivotal information is documented in a standardized form known as the “Income Tax Return.” In this article, we will explore the intricacies of the provisions governing the obligatory filing of income tax returns. These provisions are contingent upon the taxpayer’s status, and we will delve into the specific provisions under various taxpayer’s status. Stay tuned to understand the obligations associated with filing of income tax returns.
Companies
Partnership firms
Individual/HUF/AOP/BOI/Artificial Juridical Person
Charitable or Religious Trusts
Political Parties
The Chief Executive Officer of each political party is required to submit the party’s income tax return if the total income of the party, without considering the provisions of section 13A, exceeds the threshold not subject to income tax.
In the case of Certain Associations
Certain associations and entities are obligated to file an income tax return if their total income, excluding the exemptions specified in section 10, exceeds the defined non-taxable limit. List of such associations is given below:
- Research association referred to in section 10(21)
- News agency referred to in section 10(22B)
- Association or institution referred to in section 10(23A)
- Person referred to in clause (23AAA) of section 10.
- Institution referred to in section 10(23B)
- Fund/institution/trust/university/other educational institution/any hospital/medical institution referred to in sub-clause (iiiac), (iiiab), (iiiad), (iiiae), (iv), (v), (vi) or (via) of section 10(23C)
- Mutual Fund referred to in clause (23D) of section 10
- Securitization trust referred to in clause (23DA) of section 10
- Investor Protection Fund referred to in clause (23EC) or clause (23ED) of section 10.
- Core Settlement Guarantee Fund referred to in clause (23EE) of section 10
- Venture capital company or venture capital fund referred to in clause (23FB) of section 10;
- Trade union/association referred to in sub-clause (a) or (b) of section 10(24)
- Board or Authority referred to in clause (29A) of section 10.
- Body/authority/Board/Trust/Commission referred to in section 10(46)
- Infrastructure debt fund referred to in section 10(47)
University, College or Other Institution
Universities, colleges, and other educational institutions specified in clause (ii) and clause (iii) of section 35(1) are obligated to file an annual income tax return, regardless of whether they are incurring income or losses. This requirement applies when these educational entities are not already mandated to submit an income or loss return under any other provisions of the Income Tax Act.
Business Trust
Every business trust, not mandated to submit an income or loss return through other provisions of the Act, must file an annual income tax return, regardless of their financial standing. This ensures compliance with tax regulations and upholds financial transparency within the business trust domain.
Investment Fund Referred to in Section 115UB
Every investment fund identified in section 115UB, which is not required to file an income or loss return through any other provisions, must still complete an annual income tax return, irrespective of its financial results.
Persons Holding Assets Located Outside India
For residents in India, excluding those classified as not ordinarily residents, not obligated to file returns as per other provisions, the below mentioned criteria trigger the necessity to furnish an income tax return. This includes, (a) individuals holding assets or having signing authority in accounts located outside India, referred to as “beneficial owners,” or (b) being beneficiaries of assets situated overseas. They must submit a return concerning their income or loss for the previous year by the stipulated due date.
However, this provision does not apply if an individual is a beneficiary and the resulting income from the offshore asset is already included in the income of another person.
Note: It’s important to note that a “beneficial owner” is someone who gains immediate or future benefits from an asset, either directly or indirectly, through consideration provided. On the other hand, a “beneficiary” is an individual benefiting from an asset during the previous year, where the consideration was provided by a person other than the beneficiary.
Mandatory Filing of Return in Certain Cases
Starting from the Assessment Year 2020-21, any person (excluding companies and firms) not obligated to submit an income return according to section 139(1) must file one if, during the previous year, they:
(i) 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.
(ii) Incurred aggregate expenditure in excess of Rs.2 lakhs for himself or any other person for travel to a foreign country.
(iii) Incurred aggregate expenditure in excess of Rs.1 lakh towards payment of electricity bill.
(iv) Fulfils such other conditions as may be prescribed.
The CBDT vide notification No. 37/2022, dated 21-04-2022, has notified additional conditions under the seventh proviso to section 139(1) whereby return filing is made mandatory. These additional conditions mandating filing of income tax return are as follows:
(i) If total sales, turnover or gross receipt of the business exceeds Rs.60 lakhs during the previous year; or
(ii) If total gross receipt of profession exceeds Rs.10 lakhs during the previous year; or
(iii) If the total of tax deducted and collected in case of a person during the previous year is Rs.25,000 or more. The threshold limit shall be Rs.50,000 in case of a resident individual of the age of 60 years or more; or
(iv) If the aggregate deposit in one or more savings bank accounts of the person is Rs. 50 lakhs or more during the previous year.
Conclusion
The aforementioned provisions within the Income Tax Act outline essential requirements for filing income tax returns based on the taxpayer’s status. Familiarizing oneself with these critical provisions is key for taxpayers to ensure compliance and prevent any non-compliance issues related to income tax return filing. Understanding these imperatives highlights the significance of adhering to tax regulations, fostering transparency and adherence to tax norms.
Follow the Link to access the FAQ of I-T Department on ITR filing-https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs+on+filing+the+return+of+income
Follow the Link to access the CBDT Notification No.37/2022 (Seventh Proviso)-https://incometaxindia.gov.in/communications/notification/notification-37-2022.pdf
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