Nuances While Filing That Tax Return

Filing the tax return is obligatory, even if the assessee has had tax deducted at source (TDS) and finds that no extra tax needs to be paid.

- A N Shanbhag & Sandeep Shanbhag

The last date for filing income tax return for most individuals is July 31. The recent Finance Act, 2017, (FA17) has incorporated many changes in this area with the applaudable objective of speeding up the process. This article is designed for those who have missed the deadline (which was extended to August 5 this year) and those who desire to revise their return.

Who must file returns?

The sixth proviso to Sec. 139(1) requires a person to furnish a return of income if his total income without claiming any deductions under Chapter VI-A (Sec. 80C, 80D, etc) and also the exemption u/s 10(38) related with long-term capital gain (LTCG) on equities and equity-based units of mutual funds, exceeds the maximum amount which is not chargeable to tax. In other words, the return has to be filed even if these deductions and exemptions bring down the income chargeable to tax below the tax threshold.

Filing the tax return is obligatory, even if the assessee (particularly the salaried class) has suffered tax deduction at source (TDS) and finds that no extra tax needs to be paid.

All this obviously results in extremely few individuals who need not file tax returns and yet in reality, the situation is much different.

Moreover, where a Resident individual (not an RNOR – Resident but not Ordinarily Resident) has any asset (including financial interest in any entity) located outside India or signing authority for any account (bank account, demat account, etc.) located outside India, filing a tax return would be compulsory, irrespective of whether such individual has taxable income below the threshold or not.