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By Nagaraju
- In ITR file
Filing an Income Tax Return (ITR) is a crucial responsibility for individuals earning a certain income threshold. If you’ve earned ₹6 Lakhs, and spent ₹5 Lakhs, you might be wondering if you need to file an ITR and what happens if you don’t. Here’s a detailed look at the requirements and implications.
Income Tax Filing Requirements in India:
In India, the obligation to file an ITR depends on your total income before deductions. For the financial year 2023-24, the income thresholds requiring mandatory ITR filing are:
- Individuals below 60 years: ₹2.5 lakhs
- Individuals between 60 and 80 years (Senior Citizens): ₹3 lakhs
- Individuals above 80 years (Super Senior Citizens): ₹5 lakhs
Given these thresholds, if your gross total income before deductions exceeds the limits mentioned above, you are required to file an ITR.
Scenario: Earning ₹6 Lakhs and Spending ₹5 Lakhs,
Let’s break down your situation:
- Total Income: ₹6 Lakhs
- Total Expenses: ₹5 Lakhs,
While your expenses are high, the tax filing requirement is based on your total income, not based on your net savings. Therefore, if your total income is ₹6 Lakhs, you fall under the mandatory ITR filing category for individuals below 60 years.
Why Should You File an ITR?
- Legal Obligation: If your income exceeds the threshold, it’s a legal requirement to file an ITR. Non-compliance can lead to penalties.
- Avoid Penalties: Failure to file an ITR can attract a late filing fee up to ₹10,000 under Section 234F of the Income Tax Act.
- Claim Refunds: If tax has been deducted at source (TDS) on your income, you can claim a refund by filing an ITR.
- Loan and Visa Applications: Filed ITRs serve as proof of income and are often required for loan applications and visa processing.
- Carry Forward Losses: By filing an ITR, you can carry forward certain losses to future years, reducing your tax liability in those years.
What If You Don’t File an ITR?
- Penalties and Interest: You may be liable to pay penalties and interest on the tax due. The penalty can be up to ₹10,000 for late filing.
- Prosecution: In severe cases of tax evasion, there can be prosecution, which might result in imprisonment ranging from 3 months to 2 years, along with a fine.
- Inability to Claim Refunds: Any TDS deducted cannot be claimed back if you don’t file your ITR, leading to a financial loss.
- Loss of Carry Forward Benefits: Losses incurred in a financial year cannot be carried forward to subsequent years if the ITR is not filed on time.
Conclusion:
Even if your expenses are high, if your total income is ₹6 Lakhs, you are required to file an ITR. Filing your ITR ensures compliance with tax laws, helps avoid penalties, and provides several financial benefits. Always ensure you meet the deadlines to avoid any complications.