Income tax is a form of tax levied by the government on the income earned by individuals and businesses in a financial year. The amount of tax payable is based on the income earned during the year and is calculated at the end of the financial year. However, not everyone is required to file an income tax return, and there are certain categories of individuals who are exempted from doing so. In this blog, we will discuss who is not required to file an income tax return.
Individuals with low income
Individuals with a low income are exempted from filing an income tax return. For instance, for the financial year 2022-23, individuals with an annual income of up to Rs. 2.5 lakh are not required to file an income tax return. This limit is Rs. 3 lakh for senior citizens (60 years or above) and Rs. 5 lakh for super senior citizens (80 years or above).
Individuals with income below taxable limit
Individuals with an income below the taxable limit are not required to file an income tax return. For instance, for the financial year 2022-23, the taxable limit for individuals below 60 years of age is Rs. 2.5 lakh. This means that if an individual’s income is below Rs. 2.5 lakh, they are not required to file an income tax return.
Agricultural Income
Agricultural income is exempted from income tax. However, if an individual earns any other income apart from agricultural income, then they are required to file an income tax return.
Non-resident individuals
Non-resident individuals, i.e., individuals who are not resident in India, are not required to file an income tax return if their income is below the taxable limit. However, if they have any income in India, they are required to file an income tax return.
Income from investments
If an individual earns income from investments such as interest on savings account or fixed deposits, dividend income, or capital gains, and the total income is below the taxable limit, then they are not required to file an income tax return. However, if the income from investments exceeds the taxable limit, then the individual is required to file an income tax return.
Individuals with Income from Tax-Exempt Sources
Certain types of income are exempt from income tax in India. For example, the interest earned on tax-free bonds is exempt from income tax. If an individual’s income is only from such tax-exempt sources, they are not required to file an income tax return.
However, if an individual earns any other income apart from these tax-exempt sources and the total income exceeds the taxable limit, they are required to file an income tax return.
Exempt Income for Senior Citizens
Senior citizens aged 60 years and above have a higher exemption limit compared to other individuals. For instance, for the financial year 2022-23, the taxable limit for senior citizens is Rs. 3 lakh. This means that if their income is below Rs. 3 lakh, they are not required to file an income tax return.
Moreover, senior citizens can claim an exemption on the interest earned on savings accounts up to Rs. 50,000 per financial year. This exemption is over and above the exemption limit of Rs. 3 lakh.
However, if a senior citizen earns any other income apart from these sources and the total income exceeds the taxable limit, they are required to file an income tax return.
Income from Salary
If an individual’s income is only from salary, and their employer has deducted the necessary taxes, they may not be required to file an income tax return. However, if the individual has any additional income from other sources, they are required to file an income tax return.
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Filing Income Tax Return for Refund
Even if an individual is not required to file an income tax return, they may choose to do so to claim a refund. For example, if an individual has paid more tax than required through TDS (tax deducted at source), they can claim a refund by filing an income tax return.
Conclusion
It is crucial to understand the income tax rules and regulations to avoid any penalties or legal action. The income tax department may impose a penalty of up to Rs. 10,000 if an individual fails to file an income tax return, even if they are not required to do so. Therefore, it is advisable to consult a tax professional to ensure that you comply with the income tax regulations.
Frequently Ask Question
Q1. Who is exempted from filing an income tax return?
Individuals with low income, income below the taxable limit, agricultural income, non-resident individuals, and those earning income from investments that are below the taxable limit are exempted from filing an income tax return.
Q2. What is the taxable limit for individuals below 60 years of age?
For the financial year 2022-23, the taxable limit for individuals below 60 years of age is Rs. 2.5 lakh.
Q3. What is the taxable limit for senior citizens?
For the financial year 2022-23, the taxable limit for senior citizens aged 60 years and above is Rs. 3 lakh.
Q4. Can a non-resident Indian (NRI) be exempted from filing an income tax return?
Non-resident individuals, i.e., individuals who are not resident in India, are not required to file an income tax return if their income is below the taxable limit. However, if they have any income in India, they are required to file an income tax return.
Q5. Are individuals with only salary income required to file an income tax return?
If an individual’s income is only from salary, and their employer has deducted the necessary taxes, they may not be required to file an income tax return. However, if the individual has any additional income from other sources, they are required to file an income tax return.
Q6. Is it necessary to file an income tax return if an individual’s income is only from tax-exempt sources?
If an individual’s income is only from tax-exempt sources, they are not required to file an income tax return. However, if the individual earns any other income apart from these tax-exempt sources and the total income exceeds the taxable limit, they are required to file an income tax return.
Q7. Can an individual file an income tax return to claim a refund even if they are not required to do so?
Yes, even if an individual is not required to file an income tax return, they may choose to do so to claim a refund. For example, if an individual has paid more tax than required through TDS (tax deducted at source), they can claim a refund by filing an income tax return.
It is essential to be aware of the income tax rules and regulations to avoid any penalties or legal action. If you have any doubts or queries, it is advisable to consult a tax professional to ensure that you comply with the income tax regulations.
