Chandrika is a free-lance coach who conducts online courses on corporate etiquettes. She had not filed her Income Tax returns for the past few years as her income was below the basic exemption limit. During FY 21-22, she had done a few courses for a corporate client and they had deducted TDS of Rs. 20,000/-. Apart from this she did not have any other income. She bought a car from her savings and a TCS of Rs. 10,000/- was collected at source for the purchase transaction. Chandrika’s friend who is a CA advised her that she cannot skip filing her Income Tax Returns this year, even though her income is below the basic exemption limit. Should Chandrika file her ITR for AY 22-23? If she does not file, what are the consequences?
Who should file Income Tax Returns?
As per sec 139(1) of the Income Tax Act 1961, an individual is liable to file his/her income tax returns if his/her total income exceeds the basic exemption limit specified in the Act (i.e Rs. 2,50,000/- for individuals below 60 years of age).
What’s new?
Seventh proviso to Sec 139(1) was inserted by the Finance Act 2019, which provided additional criteria which mandated the filing of ITR even when the total income of the individual was below the basic exemption limit. CBDT has now notified (vide Notification no 31/2022), a new rule 12BA which prescribes additional conditions that mandate the filing of ITR even if the total income is below the basic exemption limit.
One of the newly added criteria is that, if the aggregate TDS/TCS for an individual during the year is Rs.25,000 or more, then, he/she shall be liable to file his/her ITR even if the total income is below the basic exemption limit.
Why is Chandrika liable to file ITR?
Since aggregate of TDS (Rs. 20,000/-) and TCS (Rs. 10,000/-) against her PAN crosses Rs. 25,000/- during FY 21-22, Chandrika is liable to file her Income Tax Returns for AY 22-23, even though her total income is below the basic exemption limit.
Consequences of not filing ITR for AY 22-23
If Chandrika fails to file her ITR for AY 22-23, there is a high possibility of her receive a notice from the Income Tax department for non-compliance.
How can we help you?
Various clauses from the Income Tax Act may be simplified in online contents. But most of the time, it requires professional help in identifying suitable route for specific instances. Similar to nurturing and taking care of personal health, it is important to also keep a tab on one’s financial health. We at Chockalingam Unnamalai & Associates, can help you understand the pros and cons of various choices you make in the context of personal taxation. You can bank on us for a stress free tax filing and related compliances.
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