I earned ₹1 Crore and spent ₹99.99 lakhs. Should I file IT Returns in India?

Understanding Income Tax Filing Obligations

Earning ₹1Crore Rupees in a financial year is a significant achievement. However, it brings with it the responsibility of filing your Income Tax Return (ITR). If you’ve spent ₹99.99 Lakhs of that income, you might be wondering whether you still need to file an ITR, how to go about it, and what the consequences might be if you don’t. This article aims to clarify these points for you.

In India, any individual whose income exceeds the basic exemption limit is required to file an ITR. For the financial year 2023-24, the basic exemption limit is as follows:

For individuals below 60 years: ₹2.5 lakhs
For senior citizens (60 to 80 years): ₹3 lakhs
For super senior citizens (above 80 years): ₹5 lakhs

If income is ₹1Crore , which is well above the basic exemption limit, you are obligated to file an ITR, regardless of your expenses.

Importance of Filing ITR

Filing your ITR is not just a legal obligation, but also offers several benefits:

Proof of Income: An ITR is an official document proving your income, which can be useful for various financial transactions, such as applying for car / housing loans or visas.
Refund Claims: If you have paid excess tax during the financial year, you can claim a refund only by filing your ITR.
Avoiding Penalties: Non-filing of ITR can attract penalties and interest on the unpaid tax amount. It can also lead to legal consequences, including prosecution in severe cases.
Filing Dates: Every salaried employee, pensioner, freelancer, and consultant must file their ITR before the due date. Please refer to the table below for the filing types and their implications.

Type of Return	Filing date	Details
Regular Return	Before 31st July	You successfully filed ITR on time! 👍
Belated Return	Filed between 1st August to 31st December	Must file ITR-1 / ITR-2 / ITR-3 / ITR-4 with a penalty of ₹5,000/-
Updated Return	Filed from 1st January	Must file ITR-U with a penalty of 25% of the tax

Deductions and Exemptions:

Even though you spent ₹99.99 Lakhs, it’s important to understand how deductions and exemptions work (only for old tax regime):

Deductions under Section 80C: Investments in specified instruments like PPF, EPF, NSC, ELSS, etc., up to ₹1.5 lakhs, can be claimed as deductions.
National Pension System (NPS): An additional deduction of ₹50,000 under Section 80CCD(1B) is available for contributions to NPS, over and above the ₹1.5 lakhs limit under Section 80C.
Deductions under Section 80D: Premiums paid on self and immediate family (₹25k) and parents (₹50k) health insurance can be claimed as deductions.
Other Deductions: There are various other sections like 80G (donations), 80E (education loan interest), etc., which can help reduce your taxable income.

Calculating Taxable Income:

To calculate your taxable income:

Start with your gross income (₹1Crore).
Subtract eligible deductions and exemptions (not your ₹99.99 Lakhs)
The remaining amount is your taxable income.

Filing Your ITR:

You can file your ITR online through the Income Tax Department’s e-filing portal (or) consult / visit eTaxMentor. Here are the steps:

Register/Login: Register or log in to the e-filing portal.
Select ITR Form: Choose the appropriate ITR form based on your income sources.
Fill Details: Enter your income, deductions, and other required details.
Upload Documents: Upload necessary documents, such as Form 16, investment proofs, etc.
Verify and Submit: Verify the details and submit the ITR. E-verify it using options like Aadhaar OTP, net banking, etc.

Consequences of Not Filing ITR

If you don’t file your ITR:

Loss of Refunds: You cannot claim refunds for excess tax paid.
Carry forward of losses: Non ITR filers cannot carry forward their losses from business, stock trading..etc
Penalties: A penalty of up to ₹10,000 can be levied for late filing, as per Section 234F.
Interest: Interest may be charged on the tax due under Section 234A, 234B, and 234C.
Prosecution: In few cases, the Income Tax Department may initiate prosecution for non-filing of ITR.

Conclusion:

Despite having spent ₹99.99 Lakhs, you are still required to file your ITR since your income exceeds the exemption limit. Filing ITR not only ensures compliance with the law but also offers financial benefits and avoids penalties. It’s always advisable to file your ITR on time and accurately to stay on the right side of the law.