H&R Block: Who all should file an income tax return?

H&R Block – Who all should file an income tax return?

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H&R Block – Who all should file an income tax return?

File your taxes

 

Just started earning, retired recently, very low income are people who are in a dilemma whether to file income tax returns or not. As they all dread the thought of taxes, they avoid filing returns. But is that the right way to approach? Let us find out here.

S Chatterjee, 62, had just hung up his boots after teaching psychology for more than three decades. He thought now that I have retired, I need not file a return as I am not going to get any salary.

A year later he became a victim of the Income Tax Department’s non-filer identification drive. Chatterjee was asked to inform the department why he had stopped filing returns after all these years, especially when there were high value transactions reported against his permanent account number (PAN).

He flipped the page and knew what transactions the income tax officer was referring to – TDS deduction against the FD, where he parked his retirement savings, the pending EPF dues that were cleared and some other retirement benefits against which taxes had been deducted.

Since Chatterjee was claiming tax benefits under Section 80C for his investments and his income, including pension was below the threshold limit of Rs 2.5 lakh (for senior citizens then), he thought he would not be required to file returns.

But he was wrong in calculating the requirement limits. You can escape filing income tax returns if your income is below the threshold limit of Rs 2.5 lakh before claiming various deductions under Section 80C (tax-saving investments), 80D(health insurance), loss of income from house property, etc.

He is not the only one to receive such a notice. “In the first round of data, matching, 12.19 lakh non-filers were identified. Letters have been sent. More than 5,36,220 returns have been received, apart from collection of self-assessment tax of Rs 1017.87 crore,” Commissioner of Income Tax(C&S) at CBDT, Dr B K Sinha notified. Additional 21.75 lakh potential non-filers have been identified and the Income Tax Department has informed that they would continue to pursue the “non-filers vigorously.”

So, who all are required to file an Income Tax Return in India?

Apart from companies, individuals too are supposed to file an income-tax return based on the threshold limit declared for the year during the Union Budget. So, for financial year 2014-15, one needs to file an income tax return if the total income before deductions under sections 80C, 80D, 80E… upto 80U, 10A, 10B, 10BA is more than Rs 2.5 lakh. This limit is Rs 3 lakh for senior citizens and Rs 5 lakh for super-senior citizens (above 80 years).

Also, if you have received income beyond the threshold limit from political parties, news agency, educational or medical institutions, trade unions, infrastructure debt fund or any other trust then you need to file a return too.

However, even if your taxable income is within these limits there are situations under which you need to still file tax returns.

If additional taxes have been cut, by way of tax deduction at source (TDS) and you need to claim a refund, then you will have to bring this to the notice of the income tax department by filing tax returns.

If you have incurred losses from investments or by way of taking a home loan to be declared under income from house property, which can be carried forward to other years and settle them against capital gains in future then too you will have to make a note of the same by way of filing a tax return.

Resident Indians having financial assets or holdings in foreign companies or someone who is a signing authority in a foreign firm needs to file a return in India. Non-resident Indians need to file a return in India if you earn any income out of India such as rental, investment income, pension etc.

Though you may not fall under these categories of people who need to mandatorily file return, it is in your interest to do so, if you plan to apply for loans or visas as income tax returns are mandatory documents.

Assess thoroughly whether you fall into any of these categories and file timely returns as The Income Tax Act allows the assessing officer to penalize you monetarily for not filing returns or evading taxes. A penalty of Rs.5,000 is levied if a person fails to file his return as per section 271F, while interest too is levied on those who file delayed returns.

Evasion of taxes if found by the assessing officer he can open a Pandora’s box and scrutinize your income for the past 4-6 years for Indian income and upto 16 years for foreign assets.

H&R Block India strives to blend tax expertise with a strong focus on continually improving the client experience to provide all its clients with an unparalleled value proposition for E filing their Income Tax Returns Online.

 Visit hrblock.in for more information or to find your nearest office to find assistance to file taxes.

HRBlockIndia
HRBlockIndia
H&R Block India strives to blend tax expertise with a strong focus on continually improving the client experience to provide all its clients with an unparalleled value proposition for filing their Income Tax Online.

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