Jigar M. Patel
International Tax Attorney
Section 139 of the Income-tax Act provides that an Individual or a Hindu Undivided Family are required to file their Income-tax Return (ITR), if their Gross Total Income (GTI), prior to various deductions available under the Section 80 family exceeds the basic income-tax exemption limit of Rs. 2.5 lakhs. GTI covers within its ambit the total of all taxable incomes, after considering relevant deductions available under the five heads of income, but before allowing eligible deductions under the Section 80 family.
Section 80 Deductions under Scanner
The underlying logic for the aforesaid provision is that the IT Department wishes your ITR to be under its tax scanner, if you are claiming a zero tax status on account of any deductions eligible under the Section 80 family.
Case Study – 1: Pandya earned gross salary of Rs. 6,50,000 in FY 2022-23. After excluding his exempt allowances and perquisites of Rs. 1,00,000, his taxable salary works out to Rs. 5,50,000. Interest on housing loan eligible for deduction is Rs. 2,00,000 and his income from other sources is Rs. 40,000. His GTI thus works out to Rs. 3,90,000. He has invested Rs. 1,50,000 in investments eligible for deduction u/s 80C. His taxable income is thus Rs. 2,40,000 and income-tax payable thereon is Rs. Nil. However, in this case, Pandya would be required to file his ITR for Assessment Year (AY) 2023-24.
Case Study – 2: Taxable Pension and investment income of Amin, a Senior Citizen is Rs. 2,90,000, which is below the basic exemption limit of Rs. 3,00,000 in his case. He is thus under no obligation either to pay any tax or even to file his ITR for AY 2023-24.
Case Study – 3: Ms. Agarwal earns annual rental income of Rs. 3,50,000. She is entitled to a standard deduction of Rs. 1,05,000 (at 30% of the annual rental) and accordingly her GTI works out to Rs. 2,45,000. This being lower than her exemption limit of Rs. 2,50,000, she is not required to file ITR for AY 2023-24.
Not Compulsory for all PAN Holders to file ITR
It is equally important to clear the misunderstanding that just because an individual has a PAN, filing an ITR is compulsory. PAN facilitates key financial transactions. However, if a PAN holder does not qualify for the above criteria, he is under no obligation to file his tax return.
Declaration of Assets and Liabilities in Specified Cases
The Taxman has also set his eyes on the properties of high net worth individuals (HNIs). If the total income of an individual or HUF exceeds Rs. 50 lakhs, they are required to fill in Schedule AL of the ITR, which requires disclosure of all assets and liabilities held at the end of the financial year.
Similarly, resident individuals are required to declare any assets held outside India and any income derived therefrom, including any beneficial interest held in such foreign assets by filling in the relevant details under Schedule FA of the ITR. Individuals who are non-resident or resident but not ordinarily resident have been granted exemption from discharging this obligation.
