Filing income tax returns (ITR) is a yearly requirement for many Indian taxpayers. For the assessment year (AY) 2024-25, which corresponds to the financial year 2023-24, it’s important to know if you need to file an ITR to comply with income tax regulations. Here’s a detailed guide to help you determine your obligation.

Income Thresholds

The key criterion for filing an ITR is your income level. For AY 2024-25, the thresholds are:

• Individuals below 60 years: Total income exceeding Rs 2.5 lakh.
• Senior citizens (60-80 years): Total income exceeding Rs 3 lakh.
• Super senior citizens (above 80 years): Total income exceeding Rs 5 lakh.

A tax practitioner advises, “If your total income before deductions under Sections 80C to 80U surpasses these limits, you must file an ITR.”

Beyond the basic income thresholds, the requirement to file an ITR extends to various types of income, encompassing several categories:

• Salaried Individuals: Income from salary exceeding the specified threshold.
• Income from House Property: Rent or other income generated from house property.
• Capital Gains: Earnings from the sale of property, stocks, mutual funds, etc.
• Business or Profession: Income derived from business or professional activities.
• Other Sources: Income from interest, dividends, winnings from lotteries, etc.

Specified Conditions

Even if your income is below the threshold, certain conditions mandate filing an ITR:

• Deposits in Bank Accounts: For current accounts, deposits exceeding Rs 1 crore in one or more bank accounts. For savings accounts, deposits of Rs 50 lakh or more.
• Foreign Travel Expenses: Expenditure over Rs 2 lakh on foreign travel.
• Electricity Bills: Payments exceeding Rs 1 lakh on electricity bills.

Moreover, if you have foreign assets or income, or hold signing authority in any account outside India, you are required to file an ITR regardless of your income level.

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Investors in stocks, mutual funds, or other securities are required to file an ITR under certain conditions related to investment gains and losses:

Capital Gains: You need to file an ITR if you earned either short-term or long-term capital gains from your investments.

Dividends: Even if dividends received are tax-free up to Rs 10 lakh, you are required to file an ITR.

Reporting investment losses is crucial because it allows you to carry forward losses to offset future gains, thereby reducing your tax liability in subsequent years.

Claiming Refunds: Filing an ITR is necessary if you have paid excess tax through Tax Deducted at Source (TDS) or advance tax, as it enables you to claim a refund. Without filing, you cannot reclaim the excess tax paid.

Mandatory Filers: Certain categories of individuals and entities must file an ITR regardless of income level:

• Companies and Firms: All companies and firms, irrespective of income or loss, must file an ITR.
• Charitable Trusts and Religious Institutions: If they are claiming exemption under Section 10 of the Income Tax Act.

Consequences of Non-Filing ITR:

Failing to file an ITR can result in penalties and potential prosecution:

• Late Filing Fees: A penalty of Rs 5,000 if the return is filed after the due date but before December 31 of the assessment year. If filed later, the penalty increases.
• Interest on Tax Due: Interest is levied on the amount of tax due, calculated monthly from the due date until the date of actual payment.
• Prosecution: In severe cases of non-compliance, there could be prosecution with penalties ranging from imprisonment for three months to two years, along with a fine.

It’s crucial to comply with these requirements to avoid penalties and ensure compliance with the income tax laws in India

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