Salaried? You need to file income tax returns too!

Salaried? You need to file income tax returns too!

While talking to some of my colleagues and friends who are salaried, I understand that many of them are under the impression that as full tax has already been deducted from their salary, they are not required to file their income tax returns. 

This is not correct as discharge of tax liability and the liability to file your income tax return are two different and distinct liabilities and you need to discharge both the liabilities. In this article I will discuss the legal position about individuals who are required to file income tax return. 

Who is required to file the IT returns? 

As per the income tax law you are required to file your income tax return if your gross total income exceeds the basic exemption limit. The basic exemption limit at present is Rs. 2.50 lakh for taxpayers who are below the age of 60 years. 

For senior citizens who are above 60 years but below 80 years of age, it is Rs 3 lakh. 

For tax payer above the age of 80 the limit is Rs. 5 lakh for the financial year ended 31-03-2016. 

The income to be considered for this purpose is the income before any deduction under various sections like Sections 80 C, 80 CCC, 80 CCD, 80 CCG, 80D, 80 DD, 80 DDB, 80E, 80G and 80 GGA, 80 U and 80 TTA etc. are taken into account. These deductions are available in respect of various items like employees provident fund, life insurance premium, tuition fee for children, NSC, contribution to NPS, PPF, home loan repayment, interest on education loan, health insurance premium, rent paid, deductions for investments made under Rajiv Gandhi Saving Scheme, deductions for medical treatment of handicapped dependent, expenses incurred for specified disease and saving bank account interest etc. 

So it may happen that the income after availing various deductions under Chapter VIA may fall below the exemption limit and thus leaving you with no tax liability, you still are required to file your income tax return. 

The exemption available to salaried employees from filing of your return if your income did not exceed Rs. 5 lakh earlier is not available now. 

In case you are a resident for income tax purposes, you are also required to file the income tax return in case you have any asset outside India or you are an authorized signatory for any account located outside India. The ownership of the asset may be legal or even it may be beneficiary only. So for any of you who had gone outside India on deputation or employment and either forgot to close the account or have deliberated decided to maintain the account will have to file income tax return even if you are not otherwise required to file the return. 

Likewise even if you have any investments in shares, bonds or mutual fund units of foreign companies, you are also required to file the income tax returns even if your income is otherwise not taxable. So this provision will cover the employees who have received shares of foreign holding company as ESOP as part of their compensation package. 

Claim for income tax refund 

Since TDS is deducted on almost all the payments and every one does not bother to file form No. 15 G or 15H to get the income without deduction of tax at source, or even banks sometimes deducts tax in spite of you having furnished the relevant form which results into your entitlement for refund. For any refund which you are entitled to does not come to you. You have to make a claim for the same by filing the income tax return. 

Carry forward of losses 

In addition to the above specified cases a person has to file his return of income in case he wants to avail the benefit of carry forward of losses which he is entitled to carry forward and set if off against taxable income of subsequent years. However for being able to claim the carry forward of the losses, you need to file the income tax return by the due date i.e. 31st July 2016. So from the above discussion it becomes clear that even if full tax has been deducted from your income or even in some cases where you do not have taxable income and thus do not have any tax liability, you still need to file the income tax return to be on right side of the law.

Happy Investing

Source:Moneycontrol.com