Do you need to file income tax return when you don’t have any tax liability?

According to tax and investment experts, if an earning individual has an annual income below threshold limit and TDS has been deducted from their paymaster, then in that case they need to file ITR and get their money through ITR refund. Similarly, if a person has annual income below the threshold limit but he or she has invested in mutual funds, equities, bank fixed deposits, etc., then net income of the person would include income from all sources and if it exceeds threshold limit, then in that case the earning individual needs to file income tax return.

Income tax return filing for salaried individuals

Advising earning individuals to calculate all sources of income, Mumbai-based tax expert Balwant Jain said, “It may happen that due to various deductions and rebates, you may not have any tax liability but you may still have to file your ITR if the sum of all taxable income exceeds the threshold prescribed. For example, if your income is below 5 lakhs and does not include any long-term capital gains on listed shares and equity funds. due to rebates available under section 87A, you will not have any tax liability but have to still file an ITR.”

Balwant Jain went on to add that the income to be considered for this purpose is the income before various deductions available under Chapter VIA, which comprises mainly Section 80C, 80 CCD, 80D, 80 G, 80TTA, 80 TTB etc. These deductions relate mainly to life insurance premiums and health insurance premiums, contributions towards EPF, PPF, and NPS accounts, interest from banks, tuition fees for children, repayment of home loans etc. While arriving at the amount of taxable income you have to include certain exempt incomes like, exemption from long-term capital gains under Section 54, 54EC, 54F, etc.

“The threshold of basic exemption is 2.50 lakhs for those below 60 years. It is 3 lakhs and 5 lakhs respectively for those resident individuals between 60 and 80 and those over 80 years. It may happen that due to various deductions and rebates, you may not have any tax liability but you may still have to file your ITR if the sum of all taxable income exceeds the threshold prescribed,” Balwant Jain said.

The threshold of basic exemption is 2.50 lakhs for those below 60 years. It is 3 lakhs and 5 lakhs respectively for those resident individuals between 60 and 80 and those over 80 years.

ITR filing for bank depositors

On income tax rules for bank depositors, SEBI registered tax and investment expert Jitendra Solanki said, “If a person has deposited ₹1 crore or more in one’s current account or ₹50 lakh or more in one’s savings account in single financial year, then the bank depositor needs to file ITR even when he or she has not income tax liability. Similarly, if tax deducted on your income exceeds ₹25,000 in single financial year, then you need to file ITR for that financial year. In case you are a senior citizen, then tax deduction limit is ₹50,000.”

However, Jitendra Solanki advised both Senior Citizens and individuals below 60 years of age to file ITR if there is TDS deduction on their bank interest income or any other source of income.

Updated: 10 Jun 2023, 09:56 AM IST