The new conditions are notified under a provision in the Income Tax Act which allows the government to specify in rules the cases where return filing requirement can be mandated.
The Income Tax department has amended rules to make the obligation of tax return filing applicable to more people who undertake certain large transactions but have incomes below the basic exemption limit, showed an official order.
The idea is to expand the oversight of economic activities and to ensure that those who undertake large transactions file their returns even if their income is below the basic exemption limit. The basic income tax exemption limit ranges from ₹250,000 to ₹500,000 a year depending on the age of the person. The upper limit of ₹500,000 is applicable for super senior citizens of 80 years or more.
The Central Board of Direct Taxes (CBDT) said in the Income-tax (Ninth Amendment) Rules, 2022, effective from Thursday, that in certain cases, individuals, proprietorships and professionals have to file income tax returns even if their income is below the tax exemption limit.
These cases include individuals or proprietorships with total sales or gross receipts in business exceeding ₹6 million in the year before, gross receipts from profession exceeding ₹1 million in the year before, if the aggregate of tax deducted at source (TDS) and tax collected at source (TCS) during the previous year is ₹25,000 or more. However, if it is an Indian resident who is 60 years or older, this threshold is ₹50,000 in savings account deposit, showed the order.
Also, individuals who have made deposits in savings bank account of ₹5 million or more in the previous year have to file income tax returns even if their taxable income is below the exemption threshold.
This new set of requirements widens the scope of tax return filing obligation where income is below the basic exemption limit. The new conditions are notified under a provision in the Income Tax Act which allows the government to specify in rules the cases where return filing requirement can be mandated. The Act already insists on return filing by individuals in a few cases even if their income is below the basic exemption threshold. These are people who have deposited ₹1 crore in a current account with a bank, have spent ₹200,000 on foreign travel or have spent more than ₹100,000 on electricity consumption.
The tax department has over the last few years scaled up its oversight of transactions by expanding the scope of TDS and TCS provisions, setting limits on cash transactions, and by expanding the scope of return filing requirement where people make large transactions. The department has also been exchanging data with other wings of the government including the Central Board of Indirect Taxes and Customs (CBIC) for effectively monitoring transactions and to ensure that incomes are not underreported. The department earlier this month reported a 49% jump in net direct tax receipts after refunds in FY22 to ₹14.1 trillion, up from the actual collection a year ago.
Source: livemint.com
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